If an employee pays for a periodic medical checkup required by an employer, can the amount paid be deducted, and if so, is there any limitation? Explain.

 

Employee payment of periodic medical checkup required by an employer

Step-by-step explanation

Medical expense deduction

Yes. If an employee is required to pay for periodic medical check, it is treated as a preventive medical care cost that must be deducted if the employer does not reimburse the paid amount. The deduction is allowed under Section 80D of the ITAA that involved expenses related to preventive health check-ups (O'Donnell, 2019). The costs can be incurred for self (employee), spouse or children (at times included parents).

Medical expense deduction limitation

Yes. There is a limitation on the medical expenses that can be deducted form the adjusted gross income (AGI). While a lot can be incurred for medical expenses, the allowed amount for deduction is the excess of 7.5% of the adjusted gross income (O'Donnell, 2019). If the amount paid by an employee for periodic medical checkup required by an employer is equal or less than 7.5% of the adjusted gross income (AGI0, such cannot be deducted but ay amount in excess of 7.5% AGI should be deducted for tax purposes to help reduce an employee's tax liability.