What Medical Expenses are Tax Deductible?

Tax Deductions and Credits Tax deductions on medical expenses

Even with good insurance and a low deductible, no one truly enjoys paying medical bills. One bright side to big bills is the opportunity to claim your medical expenses as a deduction on your tax return, as long as your bills are greater than 7.5% percent of your tax year’s *adjusted gross income and you can itemize your deductions. The medical expense deduction not only applies to your medical expenses, but it also applies to your spouse and dependent’s medical expenses.

If your medical procedures cost you more than 7.5% of your income, follow the next five rules to maximize your tax refund.

*Note, adjusted gross income (AGI) is your gross income like wages, salaries, or interest minus adjustments for eligible deductions like student loan interest or your IRA deduction. Your AGI can be found on line 11 of your 2020 Form 1040.

Medical Isn’t Just ‘Medical’

The IRS allows tax deductions for 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 of your monthly insurance payments if they are not paid pre-tax through an employer-provided plan, as well as travel expenses to and from the doctor. The medical expense deduction includes medical expenses you pay for yourself, your spouse, and dependents.

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, you can’t claim those expenses as deductions.

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

You Can Deduct Medical Expenses if You Itemize Your Tax Deductions

Like the headline says, to receive the benefits of the medical expense deduction, you have to qualify to itemize your deductions on your taxes, so your itemized deductions like home mortgage interest, state income taxes, property taxes, along with deductible medical expenses have to be more than the standard deduction for tax year 2020 ($12,400 single, $18,650 Head of Household, $24,800 if married filing jointly).You can’t take the standard deduction and claim the medical expense deduction at the same time.

If you are self-employed, you can deduct your health insurance premiums even if you don’t itemize your deductions.

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 is 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 and would be deductible.

Track Those Miles

Traveling back and forth to all those appointments counts. For 2020, the medical mileage rate is 17 cents per mile. Trips to pick up prescriptions, dental appointments, follow up appointments, emergency visits, and more are all included. Don’t miss out on this valuable deduction.

If you’ve incurred medical expenses during the tax year, it might be worth maximizing your deductions and taking itemized deductions. Especially if your itemized deductions bump you over the standard deduction.

Don’t worry about knowing these tax rules. TurboTax asks you simple questions about you and gives you the deductions and credits you’re eligible for based on your answers. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or tax expert, with an average 12 years experience to get your tax questions answered. TurboTax Live CPAs and tax experts are available in English and Spanish, year round and can also review, sign, and file your tax return.

Comments (31) Leave your comment

  1. How do I handle medical expenses that I know will eventually be reimbursed to me by but not before a long time? I will definitely not see that money this year. Do I claim it as a deduction this year and then enter the reimbursment in the future tax year it happens? Or do I have to skip the deduction this year?

  2. What if my Lerch medical expenses were paid with HSA dollars are the medical expenses still deductible If not what portion might be deductible

    1. Most pharmacies will print out a list of your what you paid for prescriptions during the year. You do not need to send a specific form into the IRS, but you will need to have documentation were you to be audited.

    2. Any non Reimbursed Rx Copays are considered deductible. No records need to be send to the IRS. Your pharmacy has these records on file.

  3. I am pregnant and due in 2019. I am paying out-of-pocket for all of my medical expenses. If I pre-pay the hospital in 2018 can I still claim that as 2018 medical expenses even though the delivery won’t happen until 2019?

    1. I would think so. Keep all receipts. And don’t forget that you can claim a deduction for the mileage driven to every doctor appointment, dentist, eye doctor, and each trip to pick up your prescriptions.

    1. Are you allowed to deduct over the counter medications that your doctor says you should take like calcium supplements, nasal sprays etc?

  4. If I’ve been paying a health insurance premium for my 21 yr old son – that is totally separate from my work provided ins (just for myself) can I claim that as an expense to get reimbursed for? It’s $126 monthly.

  5. I had a huge medical bill this year. But I made a payment arrangement to pay it off in 24 installments. How would I have to file it in that case?

    1. Not the premiums taken out of your check or any HSA or FSA reimbursement you will be receiveing. However, any additional out of pocket costs paid are deductible.

    1. Yes, as long as the total medical expenses exceed 7.5% of your total income. Remember you cannot take the standard deduction (12,000 per individual or 24,000 total) if you itemize your deductions.

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