Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

02/25/2008
Should I keep records of all medication purchases for taxes?
Every tax year when I go to file my taxes, I want to keep a record of all my medications that I receive from the pharmacy. And my husband says “Throw them out. We don't need them because they're filed electronically.” I don't like to do that because I like to keep my own records of my medications when I go to file. Should I keep records of all of the medications so I can file my taxes? Or should I depend on the pharmacy to bring it up on their computer?
Sharon P. Hardy, CFE:
expert info »
I would say that any reputable pharmacy company today would have an automated accounting system that:

a) Is dependable,
b) Accounts for each of the prescriptions and their related costs which are billed to and paid by the third party payer and/or the customer,
c) Is backed up on a daily basis; and
d) Account information is retained, at a minimum, for a year before it is purged.

Therefore, I see very little need to retain physical copies of this kind information, especially, if it is easily retrievable electronically. Others may differ with my opinion.
Rosemary Ervin, CPA:
expert info »
The pharmacy only includes those items purchased from them; your records may include purchases from other than the pharmacy that sends you the electronic list. Additionally, you may get reimbursed after you paid the pharmacy. Your records would reflect that.

Authors Note: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties assessed under the Internal Revenue Code
Jeff Kyle:
expert info »
I always prefer to rely on myself. As far as itemizing your medical/Rx, consult a CPA for what you actually are allowed to deduct from your taxes. They will give you the best advice.
Elizabeth Rusnak:
expert info »
Don't rely on the pharmacy to produce your medication information. If you are writing these items off for tax purposes, you should keep copies with your tax returns to support the write-off amount. Hope this helps!
Jody Rorick, CPA:
expert info »
If all you have as proof of your deduction are the receipts, then keep them. But, if you have a printout from the pharmacy or your insurance company sends you a report of your out of pocket costs, then you don't need to keep the receipts. Filing your return electronically doesn't mean you don't need proof of your deductions, if you're audited. Also, if you need a printout from the pharmacy for proof, you should get it now, and not wait to be audited, because the pharmacy might not be able to go back in time and reconstruct your co-pays.