The IRS stated in its opinion letter Index No.: 213.05-00, " Section 213(a) allows as a [tax] deduction the expenses paid during the taxable year for medical care of the taxpayer, spouse, or dependent. Under § 213(d)(1)(A), an expense is for 'medical care' if its primary purpose is the diagnosis, cure, mitigation, treatment, or prevention of disease.   Notice the words "primary purpose".  Because a hot tub is of a particularly personal nature, you must establish that your hot tub is "primarily" for the cure, mitigation, treatment, or prevention of disease before you can deduct the cost of your hot tub on your tax return.  You may be able to claim your hot tub as a tax deduction even though you also derive pleasure from it and even though someone else such as your spouse may use it, as long as you are buying the hot tub primarily to relieve pain due to an injury or disease. 

 

How do you prove to the IRS that your hot tub was purchased primarily to relieve pain?

Of course, you may not have to prove anything if you are not audited, however, you should prepare in case you are.  This is accomplished by medical records which prove that you have an injury and/or arthritis and a prescription from your doctor prescribing a hot tub for the purpose of alleviating or treating your injury or arthritis.  Ideally, you should request a written report from your treating physician which summarizes your condition (diagnoses); attaches copies of medical records showing objective findings such as X-Ray, MRI and EMG reports; states that the physician believes a hot tub would be of therapeutic value; why the hot tub is of benefit to you and your prognosis with or without using a hot tub (what the physician hopes the hot tub will accomplish).

The IRS may look at other objective factors that indicate your motive for purchasing the hot tub.

For instance, a very large hot tub built into a very expensive beautiful deck may indicate an ulterior motive, therefore, with such a hot tub, it would be advisable to have substantial medical documentation and deduct an amount less than the total purchase price.  Since the difference in price between a large hot tub and a small hot tub is usually small, you should be able to deduct most of the cost of your hot tub.  For instance, if a small four person hot tub costs $8,000 and you purchase a large seven person hot tub for $9,500, I would deduct only $8,000.

Can you deduct the cost of a hot tub when you have been reimbursed by an insurance company for the cost?

No. You should note that if you obtain payment from an insurance company to purchase your hot tub, you cannot also deduct the cost of the hot tub on your tax return.  If you deduct the cost of your hot tub on your tax return and later obtain reimbursement from an insurance company, you would then have to declare that reimbursement as income on your next year's tax return.

Can you claim your hot tub as a tax deduction when you suffered a short-term injury?

My belief is probably no.  Where a disease such as arthritis is concerned, this will pose less of a problem because of the long-term nature of the disease. However, with an injury, I believe the IRS would disallow a tax deduction where the taxpayer sustained a simple sprain, unless the taxpayer also happens to be a professional athlete or can document that use of the hot tub was necessary to reduce loss of income.  Where an injury becomes a long-term problem, such as when traumatic arthritis develops, I believe that a claim to deduct a hot tub should be allowed.  The long-term nature of some injuries and medical problems are more obvious, such as when a taxpayer undergo surgery.  You should discuss this issue with your accountant and your doctor to make sure that both are in agreement as to the length of time required for a disability and as to whether your medical condition meets that requirement.

How much will a tax deduction for a hot tub save me?

You will have to discuss this with your accountant.  In fact, you should discuss everything mentioned here with your accountant prior to deducting the expense of your hot tub on your tax return. The information here is not tax advice and although I am a lawyer and took 17 credits of tax in law school, that was a long time ago, I am not an accountant and you should not rely on the information here. 

How to Get Your Insurance to Pay for Your Hot Tub:

Will the Insurance Company Pay the Entire Cost of My Hot Tub?  If you are entitled, the insurance company will have to pay the amount required to purchase a hot tub necessary for your treatment.  This does not mean that the insurance company must purchase the largest hot tub you can find.  After all, a hot tub that can accommodate nine people is not necessary to treat the injuries of one person.  Since the difference in price between a large hot tub and a small hot tub is usually small, you should be able to obtain reimbursement for most of the cost of your hot tub.  For instance, if a small four person hot tub costs $8,000 and you purchase a large seven person hot tub for $9,500, you should be able to obtain reimbursement in the amount of $8,000 plus the costs of installation.  Some of the few very good insurance companies will likely reimburse you for the full amount of $9,500, so you should submit the full bill for reimbursement.

Health Insurance:  If a hot tub is prescribed by your physician to reduce back pain, hip, knee, joint, arthritis pain or to promote better circulation, a hot tub may be covered by your medical insurance policy.  Check with your medical insurance plan for eligibility requirements.  To properly support a health insurance claim to pay for a hot tub, you need:

1) A prescription from your doctor prescribing a hot tub.

2) Copies of medical records showing objective findings of an injury, such as X-Ray reports, MRI reports and "needle" EMG (by a neurologist) reports.

3) Ideally, you should request a report from your treating physician which summarizes your condition; states that the physician believes a hot tub would be of therapeutic value; why the hot tub is of benefit to you; and the prognosis or what the physician hopes the hot tub will accomplish.

Medical Coverage From Third-Party Liability Insurance:  If you were injured in an accident for which you have a lawyer representing you for personal injuries, ask your lawyer to find out if the defendant's insurance policy has medical coverage.  If the answer is yes, you should be able to obtain payment for a hot tub from the defendant's insurance policy.  If there is no medical coverage, the cost of a hot tub can be added to the list of your damages and you may be able to seek reimbursement to the form of a higher settlement at the end of your case, however, if there is medical coverage, the advantage is that the defendant's insurance policy will pay you now for the hot tub, rather than later.  To properly support a third-party liability insurance claim to pay for a hot tub, you need:

1-3 above

4) If you are seeking reimbursement for your hot tub from a third-party liability insurance company (the insurance company for the person or company you are suing), you need to prove that the injury was caused by the accident.  This is accomplished by a written report from your doctor and can be addressed in the same report mentioned in 3), above.  To prove that your injury was caused by the accident, your doctor's report should say "in my professional opinion, the patient's injury is causally related to the accident of (date of accident)".  "Causally related" are the magic words. 

No-Fault Insurance:  If you were injured in a car accident in a No-Fault insurance state, you may be able to obtain insurance coverage to pay for your hot tub if prescribed by your doctor.  A no-fault insurance company may deny the claim, however, if properly supported the claim will have to be approved.  To properly support a no-fault insurance claim to pay for a hot tub, you need:

1-3 above

4) If you are seeking reimbursement for your hot tub from your No-Fault insurance company, you need to prove that the injury was caused by the car accident.  This is accomplished by a written report from your doctor and can be addressed in the same report mentioned in 3), above.  To prove that your injury was caused by the car accident, your doctor's report should say "in my professional opinion, the patient's injury is causally related to the motor vehicle accident of (date of accident)".  "Causally related" are the magic words. 

Many times, the No-Fault insurance company will require your doctor to write a report, before the doctor can be paid.  If the insurance company requests your doctor to write a report, you do not have to pay for the doctor's report.  If the insurance company does not request the doctor to write a report and you need the doctor to write a report so that you can get reimbursed for a hot tub, you will probably have to pay your doctor to write the report.