The price of medical care in the U.S. can run into the thousands of dollars each year for routine care once you factor in the cost of insurance premiums, co-payments and medications.
In addition to the already hefty expense, some families are also faced with extremely costly medical conditions or diseases, which require medical expenses that can quickly add up to what, for many, is an unaffordable cost.
If your total medical and dental expenses exceed 7.5% of your adjusted gross income, you can take a medical tax deduction by itemizing your deductions on Schedule A of IRS Form 1040. If you think that you may qualify to take this deduction, or if you are unsure of your eligibility, here is some information that will help you decide for sure:
Limitations for Medical Tax Deductions
It’s important to note that the amount of your tax deduction is not the entire amount you paid for medical and dental expenses throughout the year – but rather the amount that exceeds 7.5% of your adjusted gross income. You calculate the full amount of medical and dental expenses paid, then deduct any amount that your employer or health plan reimbursed you for. List the remaining amount in excess of 7.5% of your income as a deduction on Schedule A.
For example, if your adjusted gross income is $38,000 and you paid $3,600 for eligible medical expenses, your tax deduction is $750: $3,600 – $2,850 (7.5% of $38,000) = $750.
Eligible Medical Expenses
Most medical expenses are eligible if the expenses were neither reimbursed to you nor to the doctor or health facility. Medical and dental expenses are eligible only if they were paid for the prevention or relief of a physical defect, mental defect or illness. You can claim expenses paid for treatments, diagnosis, cure, or the prevention of disease. You can also claim expenses associated with purchasing supplies, equipment, and devices used for medical care, insurance premiums and qualified long-term care insurance coverage.
You cannot deduct voluntary procedures or expenses, such as maternity clothes, over-the-counter medications, or cosmetic surgery.
Examples of Deductible Medical Expenses Include:
- medical bills for doctors, psychiatrists, psychologists, dentists, chiropractors and surgeons
- hospital bills, including nursing, long-term care, lab fees and charges for meals and lodging
- inpatient treatment for alcohol or drug addiction
- nicotine withdrawal programs
- weight loss programs you take for diagnosed diseases, including obesity
- prescription drugs and insulin
- transportation and admission expenses to medical conferences for chronic diseases that you – or your family members – suffer from
- false teeth
- prescription eyeglasses and contact lenses, or laser eye surgery
- hearing aids
- guide dogs for blind or deaf
- transportation and parking fees to get to medical care facilities, including ambulance fees (if you drive your own car, you can either take the standard mileage deduction or the actual out-of-pocket expenses for gas and oil)
Self-Employed Medical Tax Deductions
If you are self-employed individuals and make a net profit, you are eligible to deduct medical insurance paid for yourself, your spouse and your dependents, but only as long as you are not eligible for employer-sponsored health plans through either your employer or your spouse’s employer.