Fed Insults Health Mileage

For years, the Internal Revenue Service has recognized that traveling costs money. Thus you can deduct mile expenses (at a set rate per mile) for traveling to find a job, traveling for business purposes, for charity work, for household moving expenses, and for obtaining medical care. Actually, it’s Congress that sets the rates, or simply ignores reality.

While energy prices, across the board, are rising at a rate never before seen, and this started more several years ago, and while Congressional candidates (this is an election year) have known about the rising cost of energy, not only have they not increased the deduction to match, but they have actually reduced the write-off in one major category. And this reflects the power of the business lobbies.

If you are traveling for business purposes, you could deduct, for 2008, 50.5 cents a mile. Even at $4 a gallon that seems a huge amount – it assumes you get 8 miles to the gallon or that your car is in such bad shape that it needs other repairs. You can also deduct for tolls and parking separately and above the mileage rate. Thus if you are traveling from my house to New York City on business (not commuting, but, for example, going from your work place to another), you can deduct the $95.95 for distance.

Yet, as my wife travels to the Hospital for Special Surgery several times a month for care of her fractured hip, and soon for a knee replacement, she can only deduct 19 cents a mile. (Charity work is set at 14 cents a mile.) Last year Congress was gracious enough to grant medical distance at a 20-cent rate – with the huge increase in prices at the pump, what was the reason for the decline this year?

Taking the same distance, my house to New York City, the medical deduction only comes to $30.40 round-trip.

Considering the already high cost of medical care and prescriptions, and that the elderly (retired on a fixed income) are more likely to need medical care and that most businesses actually pay mileage for business trips so it can not be deducted anyway, does it make sense for this large disparity? Top that off by remembering that you first have to reduce your combined medical deductions by 7.5% of your income prior to taking it off your income when calculating taxes and business expenses do not face any reduction.

Thus, a businessman making $100,000 a year can take his entire travel expense (including food and any overnight stays) while a retired person, on a fixed $50,000 pension, Social Security, with perhaps some investment income must reduce his medical expenses by $3,750 without any meal reduction.

Assuming 20 such trips a year, as described above, the businessman gets an annual travel-related tax adjustment of $1,919, and the retired person gets nothing. His 20 trips result in an IRS deduction of $228, far below the $3,750 adjustment reduction.

Do any of the Presidential or Congressional candidates want to address this issue? If you have the opportunity, ask them. While you’re at it, ask why there is no tax adjustment for home heating fuel, while businesses get to write it off as an expense.

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