Medical Expense Deductions Available and the New 10% Expense Threshold

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On the medical front, there’s good news. Though medical expenses cost a bundle, medical insurance premiums, co-pays and uncovered medical expenses are deductible as itemized deductions on your tax return, and that can help defray the costs.

But before you breathe a sigh of relief, here’s a little bad news: In the past you could deduct those medical expenses that exceed 7.5% of your adjusted gross income; beginning in 2013, that threshold has been raised to 10%.

That means your expenses have to be higher than before in order to take the medical expense deduction.

If either you or your spouse are 65 or older in 2013, you will have some relief, since the new 10% threshold won’t take effect for you until 2017.

Don’t worry about calculating your medical expense deduction.  TurboTax will ask you questions about your medical expenses and give you the medical expense deduction you’re eligible for.

Don’t forget to include these often overlooked medical expenses:

  • Travel costs to and from doctors, medical treatments, and hospitals. For 2013 the mileage rate deduction is 24 cents a mile.
  • Long-term care insurance premiums on qualified policies.
  • Medical costs prescribed by a physician, including improvements to your home and medically necessary equipment and the costs to operate it.
  • Admission and travel to a medical conference for a chronic illness suffered by you, your spouse or one of your dependents.
  • Alcohol and drug abuse treatments and approved stop-smoking programs
  • Ongoing costs for seeing-eye dogs and other service animals
  • Weight loss programs from treatment of specific diseases (but not programs simply to improve appearance), and health club dues prescribed for a medical condition
  • Wigs for cancer patients (but not hair transplants)
  • Recliners for cardiac patients
  • Reconstructive breast surgery for breast cancer patients
  • Laser surgery to correct vision
  • Orthopedic shoes for those with foot problems
  • Cosmetic surgery to ease a deformity.
  • Remedial reading for a dyslexic child
  • An attendant to accompany a blind or deaf student

Be sure you include medical expenses for yourself, your spouse, and everyone else listed on your tax return.

If you pay medical expenses for your child, you can claim those expenses even if you do not claim them on your tax return.

And you can claim medical expenses you pay for your parents if you furnish over half of their support. If you paid bills for a dependent who died during the year, you can claim those expenses as well.

With careful planning about when medical expenses are incurred and paid, you may be able to concentrate them in alternating years. That way, you can maximize your deductions in one year, and then not claim the deduction the next year.