Medical Expense Tax Write-Offs: A Guide to What Can and Cannot Be Deducted
If you, your spouse, or your dependents have had extensive medical costs in the last year, you may want to consider deducting your medical expenses in your taxes. However, this can be a complex process, and will not be the right avenue for every household.
Here are the basics you need to know to decide if deducting medical expenses makes sense for you.
Deducting Medical Expenses
In order to claim medical expenses, they must be itemized. This will mean that the standard deductions won’t apply, so be sure that medical deductions will actually be more beneficial than standard deductions. To itemize your medical expenses, follow these steps to attach Schedule A to your 1040 Form.
Medical expenses are also not deductible unless they come to 10% or more of your annual income (or 7.5% if you are 65 or older). This means that if your annual gross income (or AGI) is $100,000 and you are over 65, your medical costs must be over $7,500 before your medical expenses will be reimbursed.
If you are 64 or younger, with the same $100,000 AGI, your annual medical expenses must reach $10,000 before you can deduct them. In this hypothetical situation, it would not make sense to deduct your medical expenses unless your medical costs exceed $10,000. Let’s say, your medical expenses come to $12,000. Your end reimbursement would be $2,000 ($12,000 – $10,000). Your deductible medical expenses are only returned in the amount that they exceed the required percentage of your AGI.
Medical Expenses that Can be Deducted
So, what qualifies as a deductible expense? The IRS has published a full list of what medical checkups and procedures are deductible, which is more than 70 items long. Here’s the simplified version of which expenses are considered deductible:
- Treatment of current medical conditions.
- Preventative care.
- Mental health care provided by a psychiatrist or psychologist.
- Dental care.
- Vision care.
- Travel expenses related to medical care.
- Surgical procedures.
- Prescription medication.
- Prescription health equipment, such as contacts, hearing aids, and false teeth.
For example, the cost of visits to an optometrist, like Crowfoot Vision Center, for visual acuity tests, eye condition management, and other standard care is deductible. As is the cost of travel required for the appointments and any eyewear prescribed by your optometrist.
Under some conditions, even items such as a new air conditioner (“necessary for relief from allergies or other respiratory problems”) or a new mattress (“bought specifically to alleviate an arthritic condition”) can qualify as deductible medical expenses.
(Information from TurboTax)
Medical Expenses that Cannot be Deducted
There are, however, nearly as many exclusions as there are provisions to what is considered medically deductible. Most of these exclusions fall under one of the following categories:
- Non-prescription medication or equipment. Items such as vitamins, toothpaste, non-prescription nicotine products, nutritional supplements, and other non-prescription medications are not deductible, except insulin. Medication purchased in or from another country, and medication or medical procedures which are currently illegal are also not deductible.
- Cosmetic procedures. Unless a cosmetic procedure is performed with the primary intention of correcting a congenital defect, or damage caused by an accident or disease, it is not deductible. For example, teeth whitening, breast augmentation, and weight loss surgery are not considered deductible.
- Costs unrelated to medical procedures. Though travel and lodging costs may be considered deductible, the cost of child care, household help, maternity clothes, and diaper services are not. Health club dues and the cost of swimming or dancing classes are also not includible, even if recommended by a doctor.
- Procedures or medication for which you have already been reimbursed. If you were reimbursed for a medical expense by your employer or insurance company, that expense is no longer deductible.
To determine whether a specific medical cost is considered deductible, consult IRS Publication 502.
If you’re having trouble figuring out if an item can be deducted (or are having trouble deciding if deducting your medical expenses is right for your household), consult with a tax preparation specialist. A tax professional can help you itemize and total your deductible medical expenses to maximize your tax write-off.
