IRS Deadline Approaching: How Philippine Medical Tourism Can Be Your Biggest US Tax Deduction

US citizens living abroad enjoy an automatic two-month extension for federal tax filing — pushing the deadline to June 15. If you're a US expat in the Philippines, that window is closing fast. But here's what many Americans don't realize: your time in the Philippines may have generated one of the most powerful and underutilized deductions available to US taxpayers — medical tourism expenses.

The US Expat Tax Basics

As a US citizen, you are required to file a federal tax return regardless of where you live in the world. Key provisions that apply to expats in the Philippines include:

• Foreign Earned Income Exclusion (FEIE): Exclude up to $126,500 (2024) of foreign-earned income from US taxation if you meet the Physical Presence Test or Bona Fide Residence Test

• Foreign Tax Credit (FTC): Offset US taxes with Philippine taxes paid to avoid double taxation

• FBAR (FinCEN 114): Required if your foreign financial accounts exceed $10,000 at any point during the year

• FATCA (Form 8938): Required for specified foreign financial assets above certain thresholds

Medical Tourism as a Tax Deduction: The Opportunity

The Philippines is one of the world's top medical tourism destinations — offering world-class healthcare at a fraction of US costs. What many US expats don't know is that qualifying medical expenses paid abroad are deductible on your US federal return, subject to the 7.5% AGI threshold.

Qualifying medical expenses that may be deductible include:

• Surgeries, dental procedures, and specialist consultations at accredited Philippine hospitals

• Prescription medications purchased in the Philippines

• Transportation costs (including flights) primarily for medical care

• Lodging near a medical facility (up to $50/night per person)

The ACA Connection: Healthcare for US Expats

The Affordable Care Act (ACA) still applies to US citizens abroad in certain ways. While expats who qualify as bona fide residents of a foreign country are generally exempt from the individual mandate, those who maintain US-based income or plan to return to the US should carefully evaluate their ACA coverage options. ACA marketplace plans can also serve as a bridge for expats who split time between the US and the Philippines.

Key Deadlines to Remember

• June 15, 2026: Automatic extension deadline for US expats (no form required)

• October 15, 2026: Extended deadline if you file Form 4868 by June 15

• April 15, 2026: FBAR deadline (with automatic extension to October 15)

How LZVCPA Can Help

Our US Expat Tax & ACA Compliance service is built specifically for Americans living in the Philippines. We prepare your federal and state returns, maximize your FEIE and FTC claims, ensure FBAR and FATCA compliance, and help you leverage medical tourism expenses as legitimate deductions. We also advise on ACA coverage strategies for expats who maintain US ties.

Don't miss the June 15 deadline. Contact us at info@lzvcpa.ph or call +63 919 396 7164 today.