Medical Expense Deductions
Medically Edited and Reviewed by: Dr. Erin Zinkhan MD, BSBE
How to Get a Bigger Tax Return With Medical Expense Deductions
The IRS claims that there is nearly a billion dollars in unclaimed tax refunds. Some health conditions and injuries can take their toll on your bank account. Hopefully that brought you to the edge of your seat so let's get into it. You may be able to get a larger tax refund if you have medical expenses adding up to more than 10% of your adjusted gross income (AGI). The expenses in excess of 10% are tax deductible. Here is a list of tax deductible medical expenses. It's an extensive and comprehensive list found on the IRS website. Here is a PDF of the same publication if you want to print it out. Keep in mind that this process is for Itemized Deductions. The tax code lets you pick between a standard deduction and an itemized deduction. Since you have to pick between the two you can use this guide to help find out which way will give you a bigger deduction. I've made a basic guide to help get you started.
What You'll need:
- Your Tax Forms: 1040, 1040A, 1040EZ, 1040SA (Schedule A; link at bottom of post)
- Your W-2 or other withholding documents
- Medical expense receipts
- Medical insurance bills
- A calculator
What Medical Expenses are Tax Deductible
To keep yourself from getting between a rock and a hard place there are a few general rules the IRS asks us to follow when deducting medical expenses. First you need to establish whether or not your expenses qualify. Next you have to check how much of your expenses you can claim as a deduction. Always talk to a tax professional if you're uncertain about something. There is free tax help available for qualifying individuals. You can find a provider at this IRS Free Tax Prep resource. Individuals who qualify for the free Volunteer Income Tax Assistance (VITA) program usually make less than $54,000 per year, have disabilities, or speak limited English.
Are the Expenses Includible Under IRS Rules?
- Step One for Medical Expense Deduction
- Check whether or not the expenses qualify as medical expenses. IRS publication 502 states:
- Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These can include the purchase of medical equipment and supplies.
- Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. You can't claim things for general health, like vitamins or vacations as tax deductions under this rule.
- Medical expenses include [but are not limited to] the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. This can also include costs for long-term care and insurance but you should follow the link to IRS Publication 502 to get a complete list.
- The next step in determining whether you can deduct medical expenses from your taxes is to add up all your qualifying medical expenses. It is important to keep all your medical receipts from the taxable year, as you may need to show proof of purchasing the qualifying medical expenses if you are audited by the IRS.
- Add the amount of money spent on all your medical expenses for the year. This number is the total cost of your qualifying medical expenses.
- Last, determine whether the total cost of your qualifying medical expenses is high enough to claim them as a deduction. Only medical expenses greater than 10% of your AGI can be deducted from your taxes. The table below shows how much money you must spend on your qualifying medical expenses to meet 10% of your AGI. Find your approximate AGI on the table. If your medical expenses are greater than the amount to the right of your approximate AGI, then your medical expenses may be deducted from your taxes.
Completing Schedule A on form 1040 will give you more information about whether you have enough medical expenses to claimn a tax deduction.
AGI 10% AGI 10% 10,000 1,000 55,000 5,500 15,000 1,500 60,000 6,000 20,000 2,000 65,000 6,500 25,000 2,500 70,000 7,000 30,000 3,000 75,000 7,500 35,000 3,500 80,000 8,000 40,000 4,000 85,000 8,500 45,000 4,500 90,000 9,000 50,000 5,000 95,000 9,500
Verify Everything and Consult With a Professional
There are many rules for claiming deductions for medical expenses, and reading the IRS's publications can be daunting. If you have any questions or uncertainty about your tax deduction, talk to a tax professional.