Out of Pocket includes impairment-related expenses. I purchased new hearing aids to do my job from home, (COVID closed office space). Add here or under medical expenses?

[ckennel40]

New hearing aids were required in order to be compatible with the virtual meetings required for the job.

[ColeenD3]

You have a choice.  You can deduct hearing aids as a medical expense on Schedule A, subject to a 7.5% of AGI floor or you can  include it as an impairment-related work expenses are deductible subject the 2% of AGI floor.

Try it both ways to see which gives the better deduction.

Please note that Itemized Deductions will only "help" when they exceed your standard deduction.

[Opus 17]

Work-related expenses for W-2 employees are no longer tax deductible whether or not subject to the 2% limitation. They were eliminated in the tax cut jobs and jobs act of 2018.

If the taxpayer is an independent contractor, work related expenses are deductible on schedule C.

However, it is not clear to me that under the circumstances, the hearing aids described here would be considered work related expenses.  Personal expenses are never deductible as work expenses, they would have to be taken as the medical expense deduction instead. The IRS gives the example of a sight impaired person who buys an assistive reading device to use at the workplace. This would be an allowable work related expense. If the taxpayer buys another assistive reading device for home use, this is a personal expense even if they sometimes read work documents at home.  Here, the taxpayer is using hearing aids in the home office. This seems like a borderline case, because these hearing aids may be useful to the taxpayer in their personal life, and there is not any way to say that they are exclusively a work related expense, unless the taxpayer always leaves the hearing aids in their home office and does not use them out of the home office for non-work related uses.  It’s not completely clear to me either way, but the situation does not fit the examples covered in IRS documentation.

In any case, no deduction for work related expenses is allowed if the tax payer is a W-2 employee. They can enter the expenses in TurboTax, and the expense may flow downhill to their state tax return if the state tax return still follows the old rules. But it will not create a federal tax deduction.

[ColeenD3]

Please see this link that states that there is a special provision for impairment related expenses.

Impairment Related Expenses

[Opus 17]

---

@ColeenD3 wrote:

Please see this link that states that there is a special provision for impairment related expenses.

Impairment Related Expenses

---

Fascinating, I did not know that.

However, per the instructions, if the employee is claiming impairment-related expenses only, they do not file form 2106.  Instead, the impairment-related expenses are entered directly on schedule A, line 16.  This also means they are not subject to the 2% limitation.

See the flow chart and the special instructions for line 10.

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-out-of-pocket-includes-impair...

See also publication 463 pages 34-35.

https://www.irs.gov/pub/irs-pdf/p463.pdf

I suspect that to enter the deduction on line 16 per the instructions, you would use the "uncommon deduction" section rather than the workplace expense section. 

However, also note the following.  

You can deduct impairment-related expenses as business expenses if they are:

• Necessary for you to do your work satisfactorily;

• For goods and services not required or used, other than incidentally, in your personal activities; and

• Not specifically covered under other income tax laws.

Hearing aids fail this test for two reasons.  First, unless they are used only in the home office, they fail test 2 because they are used more than incidentally in the taxpayer's personal activities.  They also fail the test of "not specifically covered under other income tax laws" because hearing aids are covered as deductible medical expenses.  As I read this, other workplace accommodations that are not eligible medical deductions might be deductible business expenses, but an accommodation that is also a deductible medical expense must be taken as a medical expense and not a work expense. 

[ColeenD3]

Another source is Pub 529:

Employee with impairment-related work expenses. Impairment-related work expenses are the allowable expenses of an individual with physical or mental disabilities for attendant care at his or her place of employment. They also include other expenses in connection with the place of employment that enable the employee to work. See Pub. 463 for more details. If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses. Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and other expenses in connection with your place of work that are necessary for you to be able to work.

Due to Covid restrictions where employees are forced to work from home, it is conceivable that home becomes the de facto place of work.

[Mike9241]

qualifying impairment-related work expenses are reported on form 2106.  these carry to schedule A line 16.

this means you have to itemize to get a tax benefit from the expense.  TT will select itemized or standard deduction depending on which is better unless you indicate that you are married filing separately in which case both your spouse and you must use the same method - either itemized or the standard deduction. 

[sara7venus]

Business expenses can be deducted as a percentage of personal and professional use. This is customary, and very common. For instance, a self-employed person who works from home who is hearing impaired, and who requires hearing aides in order to do this work from home is allowed to deduct a percentage of the cost of the aides, just as they would be able to deduct a percentage of the cost of a laptop that is required. It is equipment.

[DianeW777]

Exactly.  Impairment related expenses that allow you to perform your duties as a self employed individual or as an employee is a tax deduction. For employees they would need enough expenses to use itemized deductions, otherwise the standard deduction would be used.

Employee with impairment-related work expenses.:  IRS Publication 529

Impairment-related work expenses are the allowable expenses of an individual with physical or mental disabilities for attendant care at his or her place of employment. They also include other expenses in connection with the place of employment that enable the employee to work. See Pub. 463 for more details.

• If you have a physical or mental disability that limits your being employed, or substantially limits one or more of your major life activities, such as performing manual tasks (includes hearing), walking, speaking, breathing, learning, and working, you can deduct your impairment-related work expenses.

   

  Impairment-related work expenses are ordinary and necessary business expenses for attendant care services at your place of work and other expenses in connection with your place of work that are necessary for you to be able to work.

Other Itemized Deductions

• Impairment-related work expenses of a disabled person (one of the list items). To see more deductions for this section of Schedule A you can use the link provided:
  • 2021 Instructions for Schedule A