OAR 150-316-0550
Special Oregon Medical Subtraction


(1)

Eligible Expenses. Expenses eligible for this subtraction are those authorized under IRC §213. Medical and dental expenses not allowed for this subtraction include expenses:

(a)

Otherwise deducted in the calculation of Oregon taxable income for any tax period; or

(b)

Paid on behalf of any other individual who is not an eligible taxpayer or eligible spouse of the taxpayer under ORS 316.693 (Subtraction for medical expenses of elderly individuals).
Example 1: Sam (age 66) and Rebecca (age 60) file a joint return and claim Rebecca’s 80-year-old mother as a dependent. During the year, Sam and Rebecca paid $4,000 in medical and dental expenses: $1,000 for Sam, $1,000 for Rebecca and $2,000 for Rebecca’s mother. Sam’s medical expenses are the only medical expenses that qualify for the special Oregon medical subtraction because Rebecca does not meet the age requirement and Rebecca’s mother is a dependent.
Example 2: Shannon and Dustin, both age 66, file a joint return with Oregon itemized deductions. During the year, Shannon and Dustin paid $18,900 in unreimbursed medical and dental expenses: $6,900 for self-employed health insurance premiums (claimed on the front of Form 1040), $10,000 for health insurance for two employees (claimed on Schedule C), and $2,000 of unreimbursed medical and dental expenses (claimed on Schedule A, line 1). Only the medical and dental expenses on Schedule A, line 1 ($2,000) can be used in the calculation of eligible expenses for the special Oregon medical subtraction because deduction for the self-employed health insurance was already used in the calculation of Oregon taxable income and employee insurance is not an eligible expense.

(2)

Calculation of Eligible Expenses.

(a)

General rule. The general rule is that if the expenses can be attributed to a particular individual, only that individual can claim those expenses.
Example 3: Mary (age 59) and Steve (age 66). Mary and Steve each have their own insurance policy and do not cover each other on the individual policies. Mary’s premium is $350 per month and Steve’s premium is $400 per month. The only expenses that are eligible to be considered for this subtraction are Steve’s premiums, ($4,800). Depending on his income and the portion of Steve’s premiums already included in itemized deductions on Schedule A, Steve may claim up to $1,800 as a special Oregon medical subtraction.

(b)

Expenses that cannot be attributed to a particular individual. A taxpayer that cannot determine to whom the expense is attributable must prorate the expense using a method that is reasonable based on the taxpayer’s particular facts and circumstances. Common examples of expenses that are not attributable to a particular individual include, but are not limited to, medical, dental or long-term care insurance premiums. Depending on the facts and circumstances, reasonable methods of proration for such expenses may include:

(A)

Dividing the eligible expenses that are for more than one person by the number of individuals covered by the policy.

(B)

In the case of spouses filing separate returns, splitting any eligible expenses paid out of a joint checking account in which the taxpayer and the taxpayer’s spouse have the same interest equally, unless you can show otherwise.
Example 4: Branden (age 66) and Natalie (age 61) file a joint return with Oregon itemized deductions and three dependent children. During the year, Branden and Natalie paid $19,380 in medical expenses: $16,600 in health insurance premiums for a plan that covered Branden, Natalie, and all three children; $500 in dental expenses for Branden; $1,500 in medical expenses for Natalie; and $780 in medical and dental expenses for the children. Natalie and the children‘s medical and dental expenses do not qualify for this subtraction because Natalie does not meet the age requirement and the children are dependents. For Branden and Natalie, a reasonable method to calculate the joint expenses attributable to Branden is to divide the total health insurance premiums paid ($16,600) by the number of insured (5) to arrive at $3,320 for Branden’s portion of the joint expenses. Add the additional medical expenses attributable to Branden, $500, to arrive at a total of $3,820 of eligible expenses.

(3)

Taxpayer who itemizes deductions. If a taxpayer has already claimed a portion of the eligible expenses as an itemized deduction on federal schedule A, line 4, the taxpayer must make an adjustment for those eligible expenses already deducted. Only medical and dental expenses for an age-qualifying taxpayer that are not already deducted in the calculation of Oregon taxable income are eligible for the subtraction. The taxpayer must prorate medical and dental expenses included in itemized deductions to determine what portion is eligible for this subtraction.
Example 5: Jeff and Maggie, both age 64, file a joint return with Oregon itemized deductions and federal Adjusted Gross Income (AGI) of $55,000. Jeff and Maggie also claim Maggie’s 84-year-old mother as a dependent. During the year, Jeff and Maggie paid $12,300 in unreimbursed medical and dental expenses: $3,400 for self-employed health insurance premiums (claimed on the front of the 1040), $1,200 for Jeff, $4,200 for Maggie, $1,500 for Maggie’s mother, and $2,000 in long-term care insurance premiums for Jeff and Maggie.
Jeff and Maggie deduct the entire self-employed health insurance premiums on the federal return; therefore, they do not include those expenses in the calculation of the subtraction. They can only include the $8,900 of medical expenses claimed on Schedule A, line 1, to calculate the subtraction ($1,200 for Jeff, $4,200 for Maggie, $1,500 for Maggie’s mother, and $2,000 in long-term care insurance premiums for Jeff and Maggie).
For Jeff and Maggie, a reasonable method to calculate their joint expenses is to divide by two the total long-term care insurance premiums paid ($2,000) to arrive at $1,000 for each individual. Add the additional medical expenses attributable to Jeff and Maggie to arrive at total eligible expenses before calculating the subtraction. Jeff’s expenses total $2,200 ($1,200 + $1,000) and Maggie’s expenses total $5,200 ($4,200 + $1,000).
Jeff’s expenses claimed on the Schedule A are 24.7% of the total expenses ($2,200 divided by $8,900). Maggie’s expenses claimed on the Schedule A are 58.4% of the total expenses ($5,200 divided by $8,900). Jeff and Maggie could not deduct $5,500 of their expenses on Schedule A because of the AGI limitation. Jeff’s portion of the expenses that were not deducted are $1,359 ($5,500 x 24.7%; rounded). Maggie’s portion of the expenses that were not deducted is $3,212 ($5,500 x 58.4%). Based on their federal AGI, each of their expenses may not exceed $1,400 for this subtraction. Jeff’s expenses are less than the limit, so his subtraction is limited to $1,359. Maggie’s expenses are more than the limit, so her subtraction is $1,400. They will claim a $2,759 special Oregon medical subtraction on their return.

Source: Rule 150-316-0550 — Special Oregon Medical Subtraction, https://secure.­sos.­state.­or.­us/oard/view.­action?ruleNumber=150-316-0550.

150‑316‑0006
Application of Capital Losses and Capital Loss Carryforwards
150‑316‑0007
Policy — Application of Various Provisions of the Federal Internal Revenue Code
150‑316‑0009
Policy — Application of Various Provisions of Tax Law to Domestic Partners
150‑316‑0015
Adoption of Federal Law
150‑316‑0020
Tax Reform Act of 1984 Adjustments
150‑316‑0025
Definition: “Resident”
150‑316‑0027
Status of Individuals in a Foreign Country
150‑316‑0035
Oregon Net Operating Losses — Treatment After 1984
150‑316‑0040
Administrative and Judicial Interpretations
150‑316‑0043
Qualified Business Income Reduced Tax Rate (QBIRTR)
150‑316‑0045
Taxable Income of Nonresidents and Part-year Residents
150‑316‑0050
Farm Capital Gain
150‑316‑0055
Transitional Provision to Prevent Doubling Income or Deductions
150‑316‑0060
Taxable Income of Resident
150‑316‑0065
Social Security and Railroad Retirement Benefits Eligible for Subtraction
150‑316‑0080
Credit for Income Taxes Paid to Another State
150‑316‑0082
Credit for Taxes Paid to Another State When Paid by a Pass-Through Entity
150‑316‑0084
Credit for Income Taxes Paid to Another State — Computation
150‑316‑0086
Credit for Income Taxes Paid to Other States — Proof Required and Procedure for Obtaining the Credit
150‑316‑0088
Addition of Taxes Paid to Another State Claimed as an Itemized Deduction
150‑316‑0090
Credit for Duplicative State Taxation Relating to Different Years
150‑316‑0115
Disabled Child Exemption Credit
150‑316‑0120
Credit for Political Contributions
150‑316‑0125
Credit for the Gain on the Sale of a Residence Taxed by Another State
150‑316‑0130
Credit for Installation of Alternative Energy Devices
150‑316‑0135
Proration of Income and Deductions for Nonresidents and Part-Year Residents
150‑316‑0145
Proration for Pass-through Entity Income of Part Year Oregon Residents
150‑316‑0150
Separate or Joint Federal Returns for Spouses in a Marriage
150‑316‑0155
Nonresident Partners: Guaranteed Payments
150‑316‑0157
Nonresident Partners: Other Methods of Allocation and Apportionment
150‑316‑0165
Gross Income of Nonresidents
150‑316‑0167
Gross Income of Nonresidents
150‑316‑0169
Gross Income of Nonresidents
150‑316‑0171
Gross Income of Nonresidents
150‑316‑0173
Gross Income of Nonresidents
150‑316‑0175
Gross Income of Nonresidents
150‑316‑0179
Student Loan Interest Deduction — for Part-Year and Nonresidents
150‑316‑0181
Moving Expense Deduction — for Part-year and Nonresidents
150‑316‑0183
Gross Income of Nonresidents
150‑316‑0185
Gross Income of Nonresidents: Waterway Workers
150‑316‑0195
Alimony Deduction — for Part-Year and Nonresidents
150‑316‑0197
Nonresident Deduction for Contributions to IRA, Keogh, or Qualified Medical Savings Accounts
150‑316‑0205
Credit for Taxes Paid to State of Residence
150‑316‑0225
Retirement Income Credit
150‑316‑0230
Subtraction for Previously Taxed Contributions
150‑316‑0234
“Withholding Statement” and “Exemption Certificate”
150‑316‑0235
Withholding: Basis of Amount Withheld
150‑316‑0237
Employees Exempt from Withholding
150‑316‑0239
Withholding on Fringe Benefits
150‑316‑0241
Independent Contractor Definition
150‑316‑0243
Personal Liability of Responsible Officers, Members, or Employees for Taxes Withheld
150‑316‑0250
Bonding Requirements for Delinquent Withholding Employers
150‑316‑0255
Withholding by Employers
150‑316‑0257
Employer’s Election of Method of Computing Withholding
150‑316‑0265
Withholding Payments: Cash Basis
150‑316‑0267
Additional Time to File Reports
150‑316‑0275
Treatment of Payroll Based Program Overpayments
150‑316‑0282
Exemptions for Military Personnel
150‑316‑0284
Penalty
150‑316‑0290
Procedure for Correcting the Filing of Withholding Certificates
150‑316‑0295
Credit for Tax Withheld
150‑316‑0297
Where Taxpayer Reports on Fiscal Year Basis
150‑316‑0305
Withholding Income Taxes on IRAs, Annuities, and Compensation Plans
150‑316‑0307
Withholding Income Taxes on IRAs, Annuities, and Compensation Plans
150‑316‑0315
Alternative Withholding Payment Method for Employers to Avoid Undue Burden
150‑316‑0320
Voluntary Withholding for Retired Members of the Uniformed Services
150‑316‑0325
Voluntary Withholding for Civil Service Annuitants
150‑316‑0330
Semiannual Reports and Payments
150‑316‑0332
Withholding: Payment Due Dates
150‑316‑0334
Withholding Tax Payment Requirements for Agricultural Employers
150‑316‑0336
Employee’s Rights
150‑316‑0345
Requirement to use Electronic Funds Transfer
150‑316‑0347
Electronic Funds Transfer. Payroll taxes and corporation estimated income and excise taxes not combined in determining mandate. Payments to be included.
150‑316‑0355
Withholding: Payment and Reports
150‑316‑0357
Waiver of Termination Reports
150‑316‑0359
Withholding: Annual Report by Employer
150‑316‑0361
Combined Reports and Statewide Transit Tax Reports: Agricultural Employers
150‑316‑0370
Liability for Unpaid Withholdings
150‑316‑0372
Officer Liability: Joint Determination of Liability Conference
150‑316‑0380
Withholding Penalties
150‑316‑0385
Nonresident Alternate Filing
150‑316‑0390
Deductions Allowed on Either the Inheritance Tax Return or the Fiduciary Income Tax Return
150‑316‑0395
Tax Treatment of Unincorporated Organization
150‑316‑0400
Resident and Nonresident Estates and Trusts
150‑316‑0402
Oregon Qualified Trust Tax Return
150‑316‑0410
Fiduciary Adjustment
150‑316‑0415
Accumulation Distribution Credit for Oregon Taxes Paid by Trust During Income Accumulation Years
150‑316‑0420
Taxable Income of Nonresident Estate or Trust
150‑316‑0425
Oregon Multiple Funeral Trust Tax Return
150‑316‑0427
Persons Required to Make Returns
150‑316‑0435
Petitioning Department to Equally Split Joint Liability
150‑316‑0440
Innocent Spouse, Separation of Liability, and Equitable Relief Provisions
150‑316‑0445
Liability of Fiduciaries
150‑316‑0450
Decedent’s Estate: Request for a Final Tax Determination
150‑316‑0452
Decedents’ Estate: Application for Discharge from Personal Liability for Tax on Decedent’s Income
150‑316‑0465
Estimated Tax
150‑316‑0470
Allocation of Joint Estimated Tax Payments
150‑316‑0475
Estimated Tax: Farmer’s and Fisher’s
150‑316‑0480
Estimated Tax: Application of Prior Year Overpayment (Refund)
150‑316‑0485
Tax Used to Compute Underpayment of Estimated Tax
150‑316‑0487
Estimated Tax: Underpayment Interest Not Imposed if There is a Casualty, Disaster or Other Unusual Circumstances
150‑316‑0489
Estimated Tax: Underpayment Interest Not Imposed If There Is Reasonable Cause
150‑316‑0491
Estimated Tax: Partnership and S Corporation Income of Part-year Residents and Nonresidents
150‑316‑0493
Required Installments for Estimated Tax
150‑316‑0495
Estimated Tax: Joint Return to Single or Separate Return
150‑316‑0497
Estimated Tax: Single or Separate Returns to Joint Return
150‑316‑0505
Oregon Lottery Winnings and Losses
150‑316‑0507
Modification of Federal Taxable Income: Interest and Dividends
150‑316‑0509
U.S. Government Obligations
150‑316‑0511
Addition for Original Issue Discount (OID)
150‑316‑0513
Modification of Federal Taxable Income: Adding Interest or Dividends of the United States Exempted by Federal Income Tax Law
150‑316‑0515
Modification of Federal Taxable Income: Adding Federal Estate Tax Attributable to Income in Respect of a Decedent Not Taxable by Oregon
150‑316‑0519
Gain or Loss Upon the Sale of State and Municipal Bonds of Other States (Foreign States)
150‑316‑0525
U.S. Government Interest in Retirement Accounts
150‑316‑0530
Pool of Assets that Qualify to Pay State Exempt-Interest Dividends
150‑316‑0535
Federal Tax Deduction: Accrual Method of Accounting Required
150‑316‑0537
Adjustment of Federal Tax Liability
150‑316‑0545
Election to Include Child’s Unearned Income — Addition Required
150‑316‑0550
Special Oregon Medical Subtraction
150‑316‑0555
Modification of Federal Taxable Income: Itemized vs. Standard Deduction
150‑316‑0557
Modification of Federal Taxable Income: Oregon Income Tax Claimed as an Itemized Deduction
150‑316‑0559
Modification of Federal Taxable Income: Previously Taxed Contributions to Pension or Annuity
150‑316‑0565
Basis of Depreciable Assets Moved into Oregon
150‑316‑0567
Property Subject to Accelerated Cost Recovery System
150‑316‑0569
Adjustment to Income for Basis Differences
150‑316‑0575
Amount Specially Taxed Under Federal Law to Be Included in Computation of State Taxable Income: Accumulation Distributions
150‑316‑0580
Definition for Severely Disabled Exemption
150‑316‑0585
Exemption for Blind and Severely Disabled
150‑316‑0590
Substantiation for Permanently Severely Disabled
150‑316‑0595
Exempt Income of Native Americans
150‑316‑0600
Oregon Investment Advantage Apportionable Income Exemption
150‑316‑0605
Military Pay Subtraction
150‑316‑0607
First-time Home Buyer Savings Account
150‑316‑0610
Road Construction Worker’s Travel Expenses
150‑316‑0615
Substantiation Required for Construction Worker and Loggers Expenses
150‑316‑0625
(Miscellaneous) Valuation of Forest Land or “Farm Use” Land for Oregon Inheritance Tax Purposes
150‑316‑0630
Scholarship Awards used for Housing Expenses
150‑316‑0635
Subtraction for Land Contributed to Educational Institutions
150‑316‑0640
Subtraction for Qualified Investment of Severance Pay
150‑316‑0650
Waiver of Frivolous Return Penalty Imposed Under ORS 316.992
150‑316‑0652
Frivolous Return Penalty
Last Updated

Jun. 8, 2021

Rule 150-316-0550’s source at or​.us