When tax time rolls around, everyone wants the greatest return possible. As they search their receipts for anything that could be turned into a deduction, chances are a membership to the YMCA will turn up. This can be tempting since the Internal Revenue Service does allow deductions for medical expenses, and the tax filer joined as part of a therapy program. It's not that simple, however, since the IRS only allows such claims if the expense is "medically necessary."
Wellness Versus Medically Necessary
The line between medically necessary and wellness can get blurry when it comes to medical therapies for weight loss or physical rehabilitation. Medical professionals set the criteria for the transition between pain alleviation and a sense of general well-being, not the patient. Because of this, the IRS specifically writes in publication 502 that membership dues to gyms can't be deductions as a medical expense.
Deductible Medical Expenses
The IRS is OK with therapy in general as a deductible medical expense. It doesn't specify which therapies, but physical, occupational and psychotherapy all fit the bill. Nontraditional treatments are considered medical expenses by the IRS, and some YMCA facilities offer these services at an extra charge. If the Y has an acupuncturist, and you see that person for diagnosed back pain, that makes it an allowable expense. Throw in hypnotherapy sessions for weight loss too as long as a doctor has recommended that treatment.
The deductible amount of medical expenses is anything over 7.5 percent of your annual gross income. Let's take an example of physical therapy, which is often offered at YMCA centers. If you saw your physical therapist every week for 26 weeks and paid $125 per session, the deduction amount is $3,250. If your annual gross income is $25,000, the base medical amount is $1,875. The actual deduction is $3,250 minus $1,875 or $1,375.
Charitable Donation Deduction
Though the YMCA is a 501(c)(3) charitable organization, you can't deduct membership as a charitable contribution. That's because you got a benefit, the membership, from the exchange, which means it's not a donation. Since the fair market value of a gym membership generally exceeds that of a YMCA membership, no part of it is deductible.
Paul Reyes-Fournier has served as the chief financial officer for social service organizations, churches and schools. In 2009, he created his own marketing firm, RF Media. Reyes-Fournier holds a B.S. in physics and an M.B.A.