When you begin your tax paperwork organization ritual, no doubt one of the top priorities on your list will be your tax deductions. And, as we all know, if you’ve paid any medical bills, been to the dentist, spent any time in the hospital, or had any sort of doctor-patient interactions, there is potentially a treasure trove of tax deductions just waiting to be discovered.
But what can you deduct? What amount of your medical expenses are tax deductible? Do you have to show proof of the expenses that you’re claiming as deductions? Whose medical bills are able to be deducted?
These are some very common questions about medical expenses, so let’s just dive right in.
You Can Deduct Medical Expenses
More than a few people are surprised to learn that a portion of the cost of their medical and dental expenses can be subtracted, or deducted, from their adjusted gross income. However, on your 2012 taxes, only medical and dental expenses that meet the government’s minimum required amount, which is anything above 7 ½ percent of your adjusted gross income (AGI), are eligible.
In other words, if your medical expenses aren’t equal to or greater than 7 and a half percent of your income, you can’t claim them as tax deductions.
Of course, these expenses can only be deducted from your income if you itemize your tax deductions instead of taking the standard deduction.
Whose Expenses Can Be Deducted?
Whether you’re a first-timer in the medical deductions arena or a seasoned veteran, it’s important to know exactly whose medical expenses can be deducted from your income.
Although almost everyone’s life (and therefore tax) situation is unique, you can somewhat generalize the rules about medical and dental deductions. Here’s the low-down: you can deduct your medical and dental expenses, those of your spouse, or the expenses of your dependent’s – if you choose to itemize.
If you’re not sure about itemizing your deductions, TurboTax will figure out which choice benefits you best – itemize or take the standard deduction.
Exactly Which Medical and Dental Expenses Can I Deduct?
The government has an enormous list of qualifying medical and dental expenses that they have ruled as eligible for deduction on your income taxes. For a full list of every piece of information dealing with deductible medical expenses, see IRS Publication 502.
For time’s sake, here are a few of the most common expenses (and some commonly overlooked expenses) that are deductible.
- Diagnosis and Cures
- Annual Physical Exams
- Medicine, Treatment and Prevention
- Dental Treatments
- Medical Equipment, Supplies and Diagnosis Devices
- Ambulance and Other Medical Professional Transportation
- Travel expenses to and from treatment
- Insurance payments
- Chiropractor
- Psychologist
- Physical Therapy
Medical Expenses that Aren’t Deductible
The IRS updates the list of medical expense deductions quite frequently, from a tax perspective, so it’s important to know not only what is considered deductible, but what isn’t.
A few expenses that may be medical-related but aren’t as of yet deductible, according to Uncle Sam, are:
- Elective cosmetic surgery
- Medicine that isn’t FDA approved
- Expenses related to a funeral
- Medicare tax payments (for the self-employment tax)