Income Tax 2023: What counts as a health expense? – 04/11/2023 – Market

Medical and hospital expenses allow deduction in the 2023 Income Tax return and can help the taxpayer to increase their refund or reduce the tax to be paid.

Health expenses are among the main items that can most contribute to the larger refund, since there is no deduction limit, unlike what happens with other expenses, such as education, for example.

The taxpayer can deduct their health expenses and those of their dependents and food (those who receive alimony by court decision or approved by public deed).

However, not all expenses are accepted by the Federal Revenue, with rules that limit its use. An example is expenses with medicines, nurses and surgical materials that are deductible only if they are included in the payment of a hospital stay.

In most cases, expenses with health care, hospitals, doctors of all specialties and dentists are deductible. Payments made to other professionals in the area and places such as pharmacies, for example, are not validated by the Revenue.

To prove the expense, the taxpayer needs to have receipts and invoices, in addition to data from professionals or hospitals, such as CPF or CNPJ, and identification of who was the beneficiary, whether the declarant, the dependent or the beneficiary.

Medical expenses are one of the main reasons why declarations fall through the cracks. “Unconfirmed medical expenses, when the amount has not been confirmed by the professional or hospital, and non-deductible medical expenses are among the biggest problems”, says David Soares, IOB’s tax consultant.

Even those who opt for the pre-filled statement need to be aware and check that the information sent by doctors or hospitals is correct. “If you don’t come [automaticamente na declaração pré-preenchida] an expense or there is a discrepancy, the taxpayer has to include it in his statement and, if possible, notify the person who received the payment”, says tax lawyer Jonathas Lisse, from VRL Advogados.

What health expenses can be deducted from the Income Tax?

• Consultations and treatments with doctors, dentists, psychologists, physiotherapists, occupational therapists and speech therapists, among others

• Medical and dental health plans

• Surgeries and hospital stays

• Covid-19 test, provided they are carried out in clinical analysis laboratories, hospitals and clinics

• Health insurance, which is offered by companies domiciled in Brazil and covers medical, dental or hospital expenses

• Laboratory and radiological examinations in clinics or laboratories

• Orthopedic devices and orthopedic prostheses (such as mechanical legs and arms, wheelchairs, walkers, insoles and special shoes) provided they are supported by a medical prescription or are part of the clinic or hospital bill

• Dental appliances and prostheses that replace teeth (such as dentures or crowns), provided they are supported by a prescription and invoice in the name of the beneficiary or are part of the amount paid to the dental professional or clinic

• Fitting and maintenance of orthodontic braces provided the bill is issued by the dentist

• Education of people with physical or mental disabilities proven by medical report and with payment made to entities dedicated to the disabled

• Hospitalization of elderly people in a geriatric facility, provided that the location complies with Ministry of Health rules and has an operating license granted by municipal, state or federal authorities

• Plastic surgery, restorative or not, with the aim of preventing, maintaining or restoring the patient’s health

• Pacemaker included in hospital or provider bill

• Intraocular lens placed in cataract surgery with bill issued by hospital or doctor

• Blood transfusion with payment made to authorized professionals and companies

• Health plans or benefit providers that perform home health services or emergency pre-hospital care, such as mobile ICUs (Intensive Care Units)

• Payments to doctors and hospitals for services and examinations for in vitro fertilization, but it is only deductible in the declaration of the woman, who is the patient. The exception is if it appears as a dependent of another declarant

Enter as a medical expense, but only if it is included in the hospital or clinic bill:

What are the health expenses that cannot be included in the IR 2023?

• Medicines

• vaccines

• Glasses and contact lenses

• Reimbursement paid by health plan or health insurance

• Hospital companion expenses, such as accommodation and transportation

• Accommodation and tickets for medical treatment

• Payments to nurses, massage therapists, nutritionists, social workers and elderly caregivers

• Covid-19 test done in pharmacies or self-test

• Health expenses with people who are not dependent or are not listed as being fed

• Silicone prosthesis (only deductible if included in the hospital bill)

• Instrumentation and surgical material (only deductible if included in the hospital bill)

• DNA test to prove paternity

• Collection, selection and storage of stem cells from the umbilical cord

• Hospital stay at home (only deductible if you have a hospital bill)

• Assisted reproduction with “surrogacy”, even with payment to hospitals or doctors

How do I prove expenses in the Income Tax?

Vouchers need to have the professional’s CPF or CNPJ of the establishment that received the payment, in addition to the beneficiary data of the expense and the date of issue. Some expenses also require a signed medical report.

If you do not have an invoice, you must have the signature of the service provider. In the absence of these documents, the veracity of the information can be verified with proof of payment, such as a payable check.

If the payment was issued without identifying the beneficiary, the Revenue assumes that the declarant was the one who received the treatment. If not, the taxpayer may resort to a statement from the professional or company that received the amount to specify the beneficiary.

If this procedure is not done and the expense was for a dependent or feeding, the declaration may stop at the fine mesh. “That’s why it’s necessary to collect data in advance and check carefully to avoid problems”, says Lisse.

See step by step to declare health expenses in IR 2023

1. The payment must be declared in the Payments Made form

2. Click on New and select the code referring to the expense, if it concerns a health plan, doctor, clinic, dentist or other professional

3. Inform if the expense belongs to the holder, the dependent or the child

4. Fill in the CPF or CNPJ of the clinic or professional, in addition to the name

5. In Description, describe what the expense is, informing the reason

6. Finally, declare the amount paid and the non-deductible portion, if there was a refund of part of the amount

In cases of reimbursement, if the expense was in 2022, but the return of the amount only occurred in 2023, the taxpayer does not include the reimbursed amount. It must be informed in the declaration of the following year, in the form Taxable Income Received from the Legal Entity.

If the taxpayer has a health plan with a deductible or co-payment, he must declare the amount spent throughout the year. “It is not necessary to specify the value of each franchise payment or co-participation. Add all the values ​​and include them in a single file, but it needs to be released”, says Lisse.

How to declare health expenses abroad?

Expenses with doctors and hospitalizations abroad follow the same rules as for treatment in Brazil and also need proof. Payments made in foreign currency are converted to US dollars at the amount on the day of payment.

This figure is then converted into reais using the sale price set by the Central Bank of Brazil on the last business day of the first fortnight of the month prior to the payment. As in Brazil, expenses with transportation and accommodation for medical treatment abroad are not deductible.

Is childbirth expenses deductible on the IR?

Yes. According to Revenue rules, the woman’s medical and hospital expenses cannot be deducted by her husband if the declarations are made separately. But, in the case of childbirth, as these are expenses necessary for the birth of a common child, the amounts spent can be deducted by either of the two.

Are expenses with IVF (in vitro fertilization) deductible in the Income Tax?

Yes, but only the woman’s expenses are deductible. However, if the wife or partner is dependent on the husband, the expense of in vitro fertilization will be deductible in his declaration.