23andMe genetic testing kits now eligible for this tax break
Ramsey Solutions financial expert Chris Hogan on the steps to dealing with the high cost of health care and financial planning for retirement.
The IRS will now allow pretax dollars stashed away in specific savings accounts to be used toward the purchase of products from 23andMe – a company known for its genetic and ancestry testing kits.
The tax agency has decided that the health-related portion of the company’s product can be considered “medical care,” and therefore is eligible to be financed through pretax dollars from Flexible Savings Accounts and Health Savings Accounts.
Both Flexible Savings Accounts (FSAs) and Health Savings Accounts (HSAs) allow individuals to set aside pretax dollars for certain qualifying medical expenses.
The portion of the 23andMe tests the IRS deemed qualify for the break can help identify genetic risk information for diseases and health conditions – including type 2 diabetes and celiac disease.
These services, however, are not offered as standalone products from the company’s Health + Ancestry Service. Therefore, 23andMe said people will be able to use up to $117.74 of FSA and HSA dollars to save on their kit, which is normally priced at $199.
The IRS did not return FOX Business’ request for comment on the ruling.
23andMe was in the news during Amazon’s recent Prime Day sales event, where its genetic testing kits were on sale for 50 percent off. On the e-commerce giant’s website, the product is listed as a “#1 Best Seller.”
According to Refinery29, it was also one of the most sought after items on the first day of Prime Day sales.
The IRS’ ruling – first reported by The Wall Street Journal – was initially made in May, but 23andMe released a redacted version of the agency’s document on Monday. The decision relies on a part of the tax code that allows taxpayers to deduct expenses related to “medical care,” which it defines as diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.”
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The company has a calculator on its website to help customers determine how much they will be reimbursed. Individuals can also contact their FSA and HSA administrators.