There’s nothing fun about medical bills — or, most likely, the reason you got them. The debt that often results from medical bills can create a financial strain even for people with savings they can use to pay some expenses. Tax relief can offset these costs by allowing you to lower your tax burden so that you pay less income tax.
Can You Deduct Medical Expenses?
Yes, you can claim medical expenses on taxes. The IRS permits you to deduct the portion of your medical expenses that exceed 10 percent of your adjusted gross income. The threshold is 7.5 percent if you or your spouse is 65 or older.
How to Calculate Your Tax Deduction for Medical Expenses
You can deduct the amount you spend on certain types of medical care and products when that amount is above either 10 percent or 7.5 percent of your AGI, depending on your age. Your AGI is your income after adjustments for deductions like student loan interest, IRA contributions and alimony payments. Use the following steps to calculate your medical expense deduction:
For Those Age 65 and Older:
- Calculate your adjusted gross income.
- Multiply your AGI by 0.075. Your expenses must exceed this amount to be deductible.
- Add all your medical expenses for the year.
- Subtract your expenses from product of your AGI x 0.075 to find your actual deduction.
For Those Under Age 65:
- Calculate your AGI.
- Multiply your AGI by 0.10. Your expenses must exceed this amount to be deductible.
- Add all your medical expenses for the year.
- Subtract your expenses from the product of your AGI x 0.10 to find your actual deduction.
Here’s a real-world example: Say you have an AGI of $50,000 and are under 65. Multiply $50,000 by 0.10 — that is, 10 percent — to get $5,000. You’d need over $5,000 in medical expenses to claim a deduction.
With a hypothetical $6,000 in deductible medical expenses, subtracting your $5,000 base amount from the $6,000 in expenses equals $1,000, which is your deduction should you itemize rather than take the standard deduction.
What Medical Expenses Are Deductible?
The IRS defines medical care expenses to include payments for medical treatment, medical supplies, medical equipment, diagnosis mitigation and prevention of disease. Examples of medical expenses approved by the IRS include:
- Fees to doctors, surgeons, dentists, chiropractors, psychiatrists, psychologists and other providers of professional services
- Laboratory tests that are part of medical care
- Medical insurance premiums beyond the portion your employer pays and that are included in box 1 of your Form W-2
- Long-term care and long-term care insurance premiums, up to certain limits
- Inpatient alcohol and drug treatment programs
- Ambulance service
- Dental services like dentures, fillings and braces
- Weight-loss programs for a specific disease diagnosed by a physician
- Modifications, like wheelchair ramps, to your home for medical care
- Nursing equipment and supplies such as breast pumps
- Medical expenses incurred by fertility treatments, pregnancy test kits and sterilization
- Insulin and prescription drugs
- Medical equipment and supplies like glasses, contacts, hearing aids, crutches and similar medical devices
- Guide dogs for the blind or deaf
- Cosmetic surgery required because of a disease or accident
- Removing lead-based paint from a damaged surface within the reach of a child who has or has had lead poisoning
- Costs of attending a conference concerning a chronic condition of yours, your spouse’s or your dependent’s
- Stop-smoking programs, but not non-prescription drugs like nicotine gum or patches
For a complete list of deductible medical expenses, check IRS Publication 502 for answers to your tax questions. These deductions are used when filling out Schedule A (Form 1040) for itemized deductions.
Expenses That Don’t Count as Tax Deductions
Of course, not every expense that you see as medically related is one that the IRS would agree with. To avoid trouble with the taxman, don’t try to deduct non-qualifying medical expenses. You can’t include medical expenses for which you were reimbursed, for example. That’s true whether you were paid back for medical expenses you incurred or the payment was made directly to the hospital or doctor. Here’s a partial list of other expenses that won’t qualify, according to the IRS:
- Funeral expenses
- Elective cosmetic surgery
- Teeth whitening
- Activities your doctor recommends to improve your general health, such as a vacation or dancing lessons
- Illegal treatments or substances
- Nutritional supplements
- Toothpaste and other toiletries
- Nonprescription drugs except insulin
- Nicotine patches or gum
Writing off medical expenses as deductions could make for a healthier bottom line on your tax return. But make sure you only include appropriate expenses to prevent an IRS tax audit.
Michael Keenan contributed to the reporting for this article.