What Medical Expenses are Tax Deductible?

Tax Deductions and Credits

Even with good insurance and a low deductible, no one truly enjoys paying medical bills. One bright spot to big bills is the opportunity to claim your medical expenses as a tax deduction on your tax return, as long as your bills are greater than ten percent of your tax year’s adjusted gross income.

If your medical procedures cost you more than 10% of your income (still 7.5% if you are 65 and older), follow the next five rules to maximize your tax return.

Medical Isn’t Just ‘Medical’

The IRS allows deductions of dental care and vision, in addition to medical expenses. This means you can potentially deduct eye exams, contacts, glasses, dental visits, braces, false teeth, and root canals.

What else is available for medical deductions? Preventative care and surgeries, psychiatric and psychological treatment, prescription medicine and medical devices – such as hearing aids and in-home medical equipment – all fall under the medical expenses deduction.

You’re even allowed to deduct the cost your monthly insurance payments and travel expenses to and from the doctor.

Non-Deductible

Before you file, you need to know what isn’t tax deductible. As with all things tax-related, you can’t double dip on your tax benefits.

You cannot claim deductions for any expenses that you were reimbursed for – either by your insurance or your employer. If you’re using a medical pre-payment plan, or some other medical reimbursement plan to help with expenses, great. But you can’t claim those expenses as deductions if you’ve been reimbursed.

It’s also important to know that you can’t claim cosmetic surgery as a medical deduction, unless that surgery was part of a life-saving procedure or some other serious health matter. Generally, the IRS doesn’t allow for cosmetic surgeries to be claimed as medical deductions.

Other non-deductible items include every-day or non-prescription health supplies like toothpaste, soap, vitamins, or over-the-counter pain relievers.

You Must Itemize

Like the heading says, to receive the benefits of the medical expense deduction, you must itemize your tax deductions on your return. You can’t take the standard deduction and claim the medical expenses deduction at the same time.

You don’t need to worry about figuring out whether you should take the standard tax deduction or itemize.  TurboTax will figure out which one you should take based on your answers to simple questions about your tax deductible expenses and will give you the one that gives you your biggest tax refund.

Pay Your Bills

You know those medical bills that you want to deduct from your income?

When did you pay them? As far as Uncle Sam in concerned, you can only deduct medical expenses if they were paid within the tax year in which you are filing a return. You can’t claim expenses from the previous year or future expenses.  If you used a credit card to pay medical bills in the tax year, then that would count as being paid within the year.

If you’ve incurred medical expenses during this tax year, it might be worth a look to itemize everything and see just what sort of refund could be in store. Good luck.

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