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Sex Change Surgery Now Tax Deductible

By Cynthia Hsu, Esq. | Last updated on

Sex change surgeries are now tax deductible. Those who undergo gender reassignment surgery will now be able to deduct these costs from their taxes according to the Internal Revenue Service.

The IRS has recently notified the Tax Court that it will abide by its 2010 decision that allowed Rhiannon O'Donnabhain to deduct the $5,000 she spent on the surgery.

O'Donnabhain was born male and fathered three children. She was married but divorced in 1996, and had the surgery in 2002. She underwent an IRS audit in 2003, and the lawsuit was filed in 2006. She told the court she was uncomfortable with her gender starting at age 10.

The Internal Revenue Code allows individuals to deduct medical expenses paid throughout the year that are not covered by insurance. This specifically includes amounts paid to treat a disease, but excludes the amounts that are used to improve a patient's appearance.

The Tax Court ruled that the gender reassignment surgery was for a disease. In coming to its conclusion, they stated that the disorder was widely recognized in diagnostic and psychiatric texts, that medical experts testified that gender identity disorder is a serious medical condition, that physicians who examined O'Donnabhain found the disorder was a severe impairment, and that many U.S. Courts of Appeals regard the disorder as a serious medical condition.

However, the court disagreed with O'Donnabhain's argument that the costs of her breast augmentation should be deducted, as they found the procedure only improved a patient's appearance. The court said that the augmentation did not treat an underlying disease or promote the proper function of her body.

These tax rules may have important implications for the thousands of individuals who undergo gender reassignment surgery. The sex change surgery tax deduction will allow those with the disorder to deduct the cost of the operation, which can be upwards of tens of thousands of dollars according to Time.

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