When I was assigned an audit for Schedule A charitable contributions and medical expenses, I knew this would be a challenge. The member had claimed over $37,000 of medical expenses on his tax return. When I first spoke to him he explained that a large portion of the medical expenses were related to his 18 year-old daughter, who cannot eat or function without assistance. The member quickly helped me understand that this required dozens and dozens of receipts for necessary expenses to sustain his daughter’s life. I recommended that he send everything he had, including letters from doctors which could document his daughter’s condition, and an explanation of all necessary daily expenses.
A couple weeks went by and all the paperwork flooded in. The documents for the charitable donations were perfect, exactly what we needed to support the position as listed on the tax return. For the medical expenses, I was excited to see that the member had prepared a spreadsheet which listed all the daily medical expenses for his daughter, along with the quantity and the cost per item. I was also glad that we had ample evidence from doctors’ notes and evaluations to prove his daughter’s condition and all the steps necessary to care after her. A sample of the receipts was included, but some of the medical receipts were missing. I expressed my concern that we were missing receipts for some of the expenses. The member understood.
The due date to respond to the notice was already upon us, but I was in a quandary about how to present the medical expenses in less than perfect condition with some of the receipts for expenses missing. I sent the documents to the IRS to prove the charitable contributions and medical expenses, pleading in my letter for a bit of compassion for less than perfect documents.
A couple months later I received a call from the IRS examiner assigned to the case. The examiner quickly advised me that the documents for the charitable contributions were fine, but he questioned me about the medical documents. I explained in detail the specific medical condition faced by the member’s daughter, and then explained the spreadsheet we had provided and how it listed all the daily medical expenses required. I asked the examiner for sympathy and compassion for the member’s situation. I argued that the documents provided from doctors’ letters and evaluations, the spreadsheet of listed daily expenses, along with the sampling of receipts, was enough to establish the amount of necessary medical expenses incurred for the year. The examiner said he would definitely take all this into consideration.
Several weeks later the examination report came. With nervous anticipation, I opened the letter to view the results. The examiner had allowed all expenses as filed and made no changes to the return. What a relief!
I called the member to give him the good news. He was overjoyed to have this burden removed and thanked me for all the help in resolving his case. I was sure to advise the member of the importance of securely saving all receipts for medical expenses in the future so we don’t have to rely on a little compassion from the IRS in the future. Lesson learned.
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