IRS Releases Updated Publications 502 and 503

The IRS has released updated versions of Publications 502 and 503 for the 2022 tax year. Publication 502 describes medical expenses taxpayers can deduct on the 2022 federal tax returns, while Publication 503 explains the requirements necessary for taxpayers to claim the dependent care tax credit for child and dependent care expenses.

The updated version of Publication 502 is virtually identical to that of 2021, with two substantive changes:

• The standard mileage rate for the use of a vehicle for medical reasons in 2022 is 18 cents a mile from January 1 through June 30 and 22 cents a mile from July 1 through December 31. (The rate was 16 cents a mile for all of 2021.)
• References to the health coverage tax credit, a premium subsidy previously available to certain displaced workers and retirees since 2003 but expired at the end of 2021, have been removed.

Notably, masks, hand sanitizer and hand sanitizing wipes for the primary purpose of preventing the spread of COVID-19 (collectively, “personal protective equipment”) remain deductible for the 2022 tax year, just as they were for 2021, pursuant to IRS Announcement 2021-7.

Updates to Publication 503 reflect the expiration of the temporary enhancements to dependent care benefits made available under the American Rescue Plan Act of 2021 (e.g., the maximum excludable amount increased to $10,500 from $5,000 for most taxpayers in 2021). The updated version also references the COVID-19-related relief allowing for the carryover of unused DCAP amounts from 2021 to 2022 without counting toward the maximum exclusion amount to other DCAP benefits available in 2022.

While Publication 502 can be broadly instructive on the subject of medical expenses that can be reimbursed or paid for by tax-favored accounts such as health FSAs, HRAs and HSAs, its actual purpose is to explain the itemized deduction for medical expenses that individuals can claim on their income tax returns.

Accordingly, benefit plan administrators should exercise caution when using Publication 502 as a resource, given the differences among the rules specifically applicable to health FSAs, HRAs and HSAs, and the medical expense deduction (e.g., the treatment of insurance premiums). Publication 502 also has limitations when applied to plan designs with more restrictive reimbursement policies than Publication 502 might otherwise allow. For instance, many expenses deemed “deductible” by Publication 502 would not be reimbursable by an HRA integrated with a major medical plan because reimbursable expenses under an integrated HRA would (by definition) be limited only to those covered by the major medical plan.

2022 Publication 502 »
2022 Publication 503 »