Jeffrey Wade
Medical expenses can put a strain on your finances, but there are ways to cut your tax bill. The IRS allows you to deduct unreimbursed expenses for preventative care, treatment, surgeries, and dental and vision care as qualifying medical expenses. You can also deduct unreimbursed payments for prescription medications and appliances such as glasses, contacts, false teeth, and hearing aids. The IRS also lets you deduct the expenses that you pay to travel for medical care, such as mileage on your car, bus fare, and parking fees. However, it's important to note that you can only deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI). This means that if you have insurance that covers your medical expenses, you may not be able to claim additional deductions on your taxes.
| Characteristics | Values |
|---|---|
| Can you claim medical expenses if you have insurance? | Yes, if the expenses are not covered by insurance |
| What expenses can be claimed? | Medical bills, dental expenses, inpatient hospital care, nursing home care, prescription medications, transportation costs, insurance premiums, etc. |
| What expenses cannot be claimed? | Cosmetic procedures, over-the-counter medicines, controlled substances, funeral expenses, etc. |
| How to claim the deduction? | Itemize deductions on Schedule A (Form 1040) and deduct only the expenses exceeding 7.5% of your adjusted gross income |
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What You'll Learn
Deducting medical expenses that exceed 7.5% of your adjusted gross income
If you're itemizing deductions, the IRS generally allows you a medical expenses deduction if you have unreimbursed expenses that are more than 7.5% of your adjusted gross income (AGI). This means that if your AGI is $50,000, the first $3,750 ($50,000 x 0.075) of unreimbursed medical expenses doesn't count.
You can deduct the cost of care from several types of practitioners at various stages of care. This includes amounts paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners. It also includes amounts paid for inpatient hospital care or residential nursing home care, if the availability of medical care is the primary reason for being in the nursing home, including the cost of meals and lodging charged by the hospital or nursing home.
You can also include in medical expenses the amounts you pay for personal protective equipment, such as masks, hand sanitizer, and hand sanitizing wipes, for the primary purpose of preventing the spread of COVID-19. Additionally, if you're divorced, you can deduct any qualifying medical bills you pay for your children, even if your former spouse claims them as dependents.
It's important to note that the deduction only applies to expenses not compensated by insurance or otherwise, regardless of whether you receive the reimbursement directly or payment is made on your behalf to the medical provider.
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Deducting unreimbursed medical expenses
If you have insurance, you can still claim unreimbursed medical expenses that exceed 7.5% of your adjusted gross income. This applies to expenses you pay for yourself, your spouse, and your dependents.
The IRS allows you to deduct unreimbursed payments for preventative care, treatment, surgeries, dental and vision care, visits to psychologists and psychiatrists, prescription medications, and appliances such as glasses, contacts, false teeth, and hearing aids. You can also deduct expenses that you pay to travel for qualified medical care, such as mileage on your car, bus fare, and parking fees.
Deductible medical expenses may include but are not limited to the following: amounts paid in fees to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and non-traditional medical practitioners. You can also include amounts paid for inpatient hospital care or residential nursing home care, if the availability of medical care is the principal reason for being in the nursing home, including the cost of meals and lodging charged by the hospital or nursing home. If the availability of medical care is not the principal reason for residence in the nursing home, the deduction is limited to that part of the cost that is for medical care.
You can also include in medical expenses insurance premiums you pay for policies that cover medical care. However, you cannot include insurance premiums that were paid and for which you are claiming a credit or deduction. Medical care policies can provide payment for treatment, including long-term care (subject to additional limitations). If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable.
Certain costs related to nutrition, wellness, and general health are considered medical expenses. However, expenses that are not deductible include the portion of your insurance premiums treated as paid by your employer, funeral or burial expenses, amounts paid for non-prescription medicines, amounts paid for toothpaste, toiletries, or cosmetics, amounts paid for a trip or program for the general improvement of your health, and amounts paid for most cosmetic surgery.
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Deducting medical insurance premiums
If you have insurance, you may still be able to claim certain medical expenses as tax deductions, provided they meet specific criteria set by the Internal Revenue Service (IRS). You can only deduct medical expenses that you have paid out of pocket and that exceed 7.5% of your adjusted gross income (AGI) for the year.
To deduct medical insurance premiums from your taxes, you must itemize your deductions on your tax return. You can't deduct premiums if you take the standard deduction. Additionally, you can't deduct premiums paid with pre-tax money, such as through an employer-sponsored plan or an HSA. However, if you pay for health insurance coverage after taxes are taken out of your paycheck, you may be able to deduct the premiums as a medical expense.
If you have health insurance through an employer-sponsored plan, you can't deduct your monthly premiums. However, you can deduct out-of-pocket premiums, provided you don't use an HSA to cover those costs and you itemize your deductions. Similarly, if you have insurance through COBRA, you can deduct the premiums because they are paid out of your pocket. Again, this deduction only applies if you itemize and if your total medical expenses exceed 7.5% of your AGI for the year.
If you get insurance through the Health Insurance Marketplace, you can deduct the full cost of your premiums from your taxable income, even if you don't itemize your taxes. However, there is an exception to this rule: if you could have gotten insurance through a spouse's plan but chose to use the marketplace instead, you can't deduct the premiums from your taxable income.
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Deducting medical expenses for yourself, your spouse, or your dependents
If you're itemizing deductions, the IRS generally allows you to deduct medical expenses for yourself, your spouse, or your dependents if you have unreimbursed expenses that exceed 7.5% of your adjusted gross income for the year. This includes expenses paid for diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body. It's important to note that the deduction only applies to expenses not compensated by insurance or other means, regardless of whether reimbursement is received directly or paid on your behalf to the medical provider.
Deductible medical expenses may include, but are not limited to, the following:
- Fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, and psychologists.
- Inpatient hospital care or residential nursing home care, provided that the availability of medical care is the principal reason for residence.
- Acupuncture treatments, inpatient treatment for drug addiction, smoking cessation programs, and prescription drugs to alleviate nicotine withdrawal.
- Transportation costs primarily for and essential to medical care, including personal car expenses such as gas and mileage, as well as taxi, bus, or train fares.
- Insurance premiums for policies that cover medical care, including long-term care insurance.
- Costs for prescribed medications and drugs, including insulin.
- Expenses for admission and transportation to a medical conference if it primarily concerns the chronic illness of yourself, your spouse, or your dependent.
If you are self-employed and had a net profit for the year, you may be able to deduct health insurance premiums for yourself, your spouse, your dependents, and your children under the age of 27. Additionally, if you are divorced, you can deduct any qualifying medical bills you pay for your children, even if your former spouse claims them as dependents.
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Deducting medical expenses for inpatient hospital care
If you're itemizing deductions, the IRS allows you to deduct unreimbursed payments for inpatient hospital care as a medical expense. This is applicable only if the principal reason for being in the hospital is to receive medical care. This includes the cost of meals and lodging charged by the hospital. However, if the availability of medical care is not the principal reason for residence in the hospital, the deduction is limited to the part of the cost that is for medical care.
You can deduct the cost of inpatient hospital care from several types of practitioners at various stages of care. This includes doctors, dentists, surgeons, chiropractors, psychiatrists, and psychologists. You can also deduct the expenses that you pay to travel for medical care, such as mileage on your car, bus fare, and parking fees.
The IRS allows you to deduct unreimbursed payments for preventative care, treatment, surgeries, and dental and vision care as qualifying medical expenses. You can also deduct unreimbursed payments for prescription medications and appliances such as glasses, contacts, false teeth, and hearing aids.
It's important to note that you can only deduct medical expenses that are more than 7.5% of your adjusted gross income (AGI). This means that if your medical expenses are less than 7.5% of your AGI, you won't be able to claim a deduction. Additionally, you must itemize your deductions on IRS Schedule A to deduct your medical expenses instead of taking the Standard Deduction.
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Frequently asked questions
Yes, if your medical bills are not fully covered by your insurance, you may be able to take a deduction for the remaining expenses to reduce your tax bill. You can only deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI).
Deductible medical expenses include payments to doctors, dentists, surgeons, chiropractors, psychiatrists, and psychologists. They also include inpatient hospital care or residential nursing home care, acupuncture treatments, addiction treatments, and prescription drugs.
To claim a medical expense deduction, you must itemize your deductions on IRS Schedule A. You must use IRS Form 1040 to file your taxes and attach Schedule A. On Schedule A, report the total medical expenses you paid during the year on line 1 and your adjusted gross income on line 2.
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