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Understanding Tax Deductible Medical Expenses

If you’ve paid out of pocket for medical, dental, or other health-related expenses this year, you know how quickly these costs can add up. The IRS offers some relief: many unreimbursed medical expenses are tax deductible when they exceed 7.5% of your adjusted gross income (AGI). This article will guide you through what medical expenses are tax deductible, what aren’t, and how to claim these deductions.

What Medical Expenses Are Tax Deductible?

Medical expenses are only tax deductible when you itemize deductions on your tax return. If you take the standard deduction, you can’t deduct medical expenses separately. According to IRS Publication 502, some common deductible expenses include:

• Fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners
• Inpatient hospital care
• Residential nursing home care
• Acupuncture treatments
• Inpatient treatment for drug or alcohol addiction
• Smoking-cessation programs and prescription drugs for nicotine withdrawal
• Weight-loss programs for specific diseases diagnosed by a physician
• Health club memberships if part of obesity treatment
• Prescription drugs and medicines, including insulin
• Medical aids like false teeth, eyeglasses, contact lenses, or hearing aids
• Service animals for visually, hearing, or physically disabled persons
• Crutches and wheelchairs
• Transportation costs for receiving qualifying medical care
• Insurance premiums for medical care and limited amounts for long-term care

What Medical Expenses Are Not Tax Deductible?

Non-deductible health-related expenses include:

• Insurance premiums paid through an employer-sponsored health plan
• Funeral or burial expenses
• Nonprescription medicines, toiletries, toothpaste, or cosmetics
• Trips taken with the general goal of improving health
• Cosmetic surgery
• Nonprescription nicotine patches or gum

Additionally, medical expenses paid through insurance or health savings accounts (HSA), flexible spending accounts (FSA), Archer medical savings accounts (MSA), or health reimbursement arrangements (HRA) are not deductible.

What Percentage of Medical Expenses Are Tax Deductible?

All qualifying medical expenses are tax deductible, but the deduction is limited based on a percentage of your AGI. Qualifying medical expenses that are less than 7.5% of your AGI are not deductible; eligible medical expenses that exceed 7.5% of your AGI are.

For example, if your AGI is $80,000, the first $6,000 (7.5% of $80,000) of your qualifying medical expenses are not deductible. If your total qualifying medical expenses for the year are $10,000, you can deduct the remaining $4,000.

How to Deduct Medical Expenses

To claim a deduction for medical expenses on your federal tax return, you’ll need Schedule A (Form 1040). Follow these steps:

1. Total up your qualified medical expenses and premiums for the year. Keep receipts and payment records with your tax files.
2. Include any out-of-pocket medical insurance premiums you’ve paid. If you claimed the self-employment health insurance deduction on Schedule 1 (Form 1040), do not include the amount on line 17 in your medical deduction.
3. Subtract any reimbursements paid to you. Don’t include payments made from an HSA, FSA, or Archer MSA.
4. Report your total medical expenses on line one of Schedule A. For more details, see Instructions for Schedule A.

You may also want to claim other itemized deductions available to you, such as home mortgage interest, state and local taxes, capital losses, and charity donations.

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