Question

Is a taxpayer required to report the reimbursement of a medical expense by insurance as income if the reimbursement is received in the year following the year of the expenditure?

Answer 1

Answer:

The reimbursement of medical​ expenses to a taxpayer is not considered as an income or taxable by the IRS.

If the taxpayer had previously deducted the expense and it resulted in tax savings, the reimbursement of a medical expense by insurance would be taxable. More so, there would have been no tax benefit if either the taxpayer had claimed the standard deduction, or if the floor for the medical deduction exceeded the medical expenses.