Insights

IRS Releases 2016 Versions of Publications 502 and 503


The IRS recently released the updated versions of Publications 502 (Medical and Dental Expenses) and 503 (Child and Dependent Care Expenses). Publication 502 describes what medical expenses are deductible on taxpayers’ 2016 federal income tax returns. For employers, Publication 502 provides valuable guidance on what expenses might qualify as IRC Section 213(d) medical expenses, which is helpful in identifying expenses that may be reimbursed or paid by a health FSA, HSA, HRA or other employer-sponsored group health plans. However, employers should know that Publication 502 does not include all of the rules for reimbursing expenses under those plans.Publication 503 describes the requirements relating to the dependent care tax credit (DCTC). It is directed primarily at taxpayers to help determine their eligibility for the credit. Employers should know that the rules relating to the DCTC are different from those relating to employer-sponsored dependent care assistance programs (DCAPs or dependent care FSAs).The recently released Publications 502 and 503 are substantially similar to the 2015 versions. Regarding Publication 502, information about the health coverage tax credit has been updated. Dollars amounts under both publications have also been updated, where appropriate, to account for inflation (e.g. the standard mileage rate for use of an automobile to obtain medical care). IRS Publication 502 »
IRS Publication 503 »