Medical expenses recovered after being claimed as a deduction in the previous year must be included in income in the year of recovery to the extent that the deduction decreased taxable income in the year they were deducted.

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This is known as the tax benefit rule, where if a taxpayer receives a tax benefit (lower taxable income) from deducting medical expenses in one year and then recovers those expenses in a later year, the recovery must be included in income to the extent that the deduction provided a tax benefit in the previous year.

Medical Expenses Recovered After Being Claimed as a Deduction in the Previous