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Your Medical Expenses May Be Deductible

(posted: February 21st, 2017)


Medical expenses can add up fast. Often it's the unexpected, like car accidents or a moment of distraction in your home, but even long-term illnesses and the conditions that come with age can outstrip your plans and cause your out-of-pocket costs to climb.

The good news is, some of those expenses may be tax deductible. But, while the IRS allows individuals to deduct qualifying medical expenses that are not covered or reimbursed by their health insurance company, there are certain rules in order to qualify.

Rules For Claiming Medical Expenses

First, as with most deductions, you must decide if your medical costs (and other things that can be itemized) add up to more than your standard deduction amount, in which case you'll be itemizing on your tax return.

If your itemizable expenses aren't greater than your standard claim amount, there's no reason to go to the trouble of collecting receipts and filing Schedule A.

But if you do find that you'll do better by itemizing, then your medical and dental expenses must meet a certain threshold.

For the 2016 tax year, individuals younger than 65 must have medical costs that exceed 10 percent of their adjusted gross income (AGI). That's more than it sounds like.

Say your AGI is $85,000. Your medical expenses would need to exceed $8,500, and then it's only the amount beyond $8,500 that can be counted when you itemize. So, if your deductible medical costs for the tax year are $8,957 then the amount you can deduct is $457.

If, however, you were 65 or older you would only need to go over 7.5 percent of AGI to deduct your medical expenses.

In this age-specific tax situation, your medical expenses would only need to exceed $6,375.

It's important to note that this is the last year that filers age 65 or older will get this lower threshold to claim medical deductions. Beginning in 2017, anyone of any age must go over the 10 percent of AGI threshold to claim itemized medical deductions.

Hang onto all receipts, invoices, and other documentation and add up all medical costs to ensure this threshold is met before filing for a tax deduction.

Plus, you're going to need to make sure your expenditures qualify.

Qualifying Medical Expenses

Even though not all medical expenses qualify for a tax deduction, many medical and health-related expenses can be claimed for taxpayers, their spouses, and their dependents. These qualifying expenses include:

  • Alcohol or drug treatment
  • Artificial limbs and prosthetics
  • Eyewear, including prescription glasses and contacts
  • False teeth
  • Guide dogs for the blind and deaf
  • Hearing aids
  • Insurance premiums
  • Medical fees
  • Prescription drugs, including insulin
  • Psychiatric care
  • Smoking cessation programs

People also overlook associated health costs that are actually tax deductible. You can write off travel expenses to and from medical treatments (including mileage, tolls and parking fees, public transportation and ambulance service), uninsured medical treatments, some long-term care insurance costs, and more.

Non-Qualifying Medical Expenses

Examples of some expenses that relate to your health and well-being but don't qualify for a tax deduction include:

  • Cosmetic surgery
  • Gym memberships
  • Life insurance premiums
  • Nonprescription drugs
  • Nutritional supplements

Also note that you can't "double-dip" with your deductions. If you use money from your tax-free Health Savings Account (HSA) or medical flexible spending account (FSA), to pay for health-related treatments, you can't count those expenses towards your medical cost deduction.

Please Contact Us if you think you may be eligible to deduct health-related costs.

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