Unexpected medical expenses throughout the year can be an enormous burden on your finances. Fortunately, during tax season, you may be able to find some financial relief through the medical expense tax deduction. At the federal level, you may be able to deduct some of your qualifying medical expenses as long as you meet the requirements from the IRS.
Keep your receipts if you or your dependents spend time in the hospital or face costly medical costs during the year. Tax deductions can lower your total tax liability and reduce your taxable income. If you are interested in claiming medical expenses on your taxes, this article is for you. We cover what the medical expense deduction is, what the qualifying medical expenses are, what medical expenses are not tax-deductible and how you can claim medical expenses on your taxes.
Medical Expense Deduction
The medical expense deduction allows taxpayers to deduct unreimbursed, qualified medical expenses. This deduction lowers your taxable income if you spend more than 7.5% of your adjusted gross income (AGI) on your medical costs throughout the tax year, including prescriptions, doctor’s fees and disease treatment. For example, if you have an AGI of $50,000, any health care expenses above $3,750 may be deductible. So if you have $5,000 in medical bills, $1,250 of your bills could be tax-deductible.
The IRS expects you to be honest when you claim the medical expense deduction, so keep your receipts as proof of your costs. Additionally, some states offer a medical expense deduction and may allow a lower threshold that could be easier for you to qualify for.
You must pay for these medical expenses during the year for which you claim the tax deduction, regardless of when you received the health care services. For example, if you receive treatment in December 2022 but pay your bill in January 2023, you will claim the medical expense deduction on your 2023 tax return.
If you pay by check, your payment date is the date you mailed or delivered the check. If you pay over the phone or online, your payment day is included on the statement that shows when you made your payment. If you pay with a credit card, your payment date is the date the charge was made rather than the day you paid your credit card bill.
Qualified Medical Expenses
A medical care expense is a payment for a diagnosis, treatment, cure, prevention or mitigation of a disease or a payment for treatment that affects any function or structure of the body. Qualified medical expenses that you may be able to deduct on your taxes include payments for:
- Insulin
- Surgeries
- Prostheses
- False teeth
- Legal abortions
- Laboratory fees
- Diagnostic tests
- Pregnancy tests
- Hospital services
- Preventative care
- Fertility treatments
- Blood sugar test kits
- Annual physical exam
- COVID-19 home testing
- Acupuncture treatments
- COVID-19 treatment costs
- Oxygen and related equipment
- Drugs that require prescriptions for use
- Nontraditional medical practitioner fees
- Birth control pills and sterilization procedures
- Hearing aids, batteries, maintenance and repairs
- Participation in a program for smoking-cessation
- Mobility devices, such as crutches and wheelchairs
- Inpatient treatment at a center for drug or alcohol addiction
- Drugs to alleviate withdrawal from nicotine that require a prescription
- Health insurance premiums, except for the portion paid by your employer
- Dentist fees, preventive treatments and procedures to treat dental disease
- Eye doctor fees, contact lenses, prescription or reading eyeglasses and eye surgery
- Service animal like a guide dog to assist a hearing or visually impaired person or with other physical disabilities
- Participation in a weight-loss program to address a specific disease that has been diagnosed by a physician, such as obesity
- Personal protective equipment (PPE) used to prevent spreading COVID-19, such as masks, sanitizing wipes and hand sanitizer
- Provider fees for doctors, including chiropractors, osteopaths, occupational therapists, physical therapists, psychiatrists, psychologists and surgeons
- Residential nursing home care or inpatient hospital care costs, including meals and lodging, as long as the principal reason for the stay is the availability of health care
- Transportation and admission to a medical conference related to your chronic illness or a chronic illness your spouse or a dependent has, as long as the costs are essential for necessary health care
- Improvements made to your home or equipment installed in your home to assist with a disability, such as widening a hallway or door, adding a ramp or chairlift, adjusting fixtures and electrical outlets or lowering cabinets and counters
- Transportation that is essential to and primarily for qualifying medical care expenses, such as the out-of-pocket expenses for gas, the standard mileage rate for health care expenses, the costs of parking and tolls or the fare for ambulances, taxis, trains, buses or personal cars
If you are self-employed, you may qualify for the tax deduction for self-employed health insurance if you have a net annual profit. Rather than an itemized deduction, this is an adjustment to your income for premiums you’ve paid on a health insurance policy, including qualifying long-term care insurance policies for yourself, your dependents or your spouse. If you opt not to claim all your paid premiums, you can include the remaining medical expenses on Schedule A (Form 1040) via an itemized deduction.
Whose Medical Expenses You Can Deduct on Your Return
Along with your own medical costs, you may be able to deduct medical expenses for your spouse or qualifying dependent. For someone to be considered a qualifying dependent, you must meet the following criteria:
- You should provide at least half of their total annual support, and no other person provided more than half of this person’s support.
- They must be a U.S. citizen, national, resident alien or a resident of Mexico or Canada.
- They need a taxpayer identification number, which is typically a Social Security number.
- They cannot have filed a joint tax return except to claim a refund.
- No one else can claim you as a dependent.
While children are often claimed as dependents, other family members may be qualifying dependents. For example, if your niece lived with you for nine months while she had no income and you provided all of her support, you may be able to claim her as a dependent on your tax return, as long as you meet the above criteria.
To claim your spouse’s medical expenses, you and your spouse must have been married when you paid the expense or when the service was received. Your spouse should also be a U.S. citizen or resident alien for the duration of the tax year.
If you are legally separated or divorced, you may be able to deduct qualifying medical bills you paid for your child, even if your ex-spouse claims your child as a dependent. You can only claim the portion of the medical bill you paid, and your spouse can claim the portion of the expense they paid. If you and multiple people cover medical expenses with a multiple support agreement, the person claiming the dependent is the only one who can claim this deduction.
You may also be able to deduct medical expenses for a deceased taxpayer. The same rule applies that you must claim the deduction for medical expenses for the year you paid those costs, regardless of the year the taxpayer passed away.
Medical Expenses That Are Not Tax-Deductible
Not every medical cost is a qualified expense, however. Some medical expenses that are not tax-deductible include:
- Diet food items
- Health club dues
- Toiletries and cosmetics
- Nursing care for healthy infants
- Illegal operations and treatments
- Funeral, burial and cremation expenses
- Medical expenses paid in a different year
- Toothpaste and tooth whitening products
- Nonprescription medications, except insulin
- Most drugs that are not approved by the FDA
- Hair removal products, procedures or services
- Contributions to a health savings account (HSA)
- A program or trip for generally improving your health
- Nicotine gum or patches that do not need a prescription
- Pre-tax salary contributions to your employer-sponsored health plan
- Premiums an employer pays, unless they are included in box 1 on your W-2
- Medical costs paid by someone with whom you do not file taxes except for a qualifying relative
- Most cosmetic surgeries, except for surgeries related to diseases, accidents or congenital abnormalities
- Lodging and meals while attending a medical conference for your, your spouse’s or your dependent’s chronic illness
- Premiums for Medicare Part A, Medicare Part B supplemental insurance or Medicare Part D prescription drug insurance
- Medical bills you paid with HSA or flexible spending account (FSA) distributions, as these accounts already offer tax advantages
You also cannot deduct reimbursed expenses, such as medical bills that your insurance covered. For example, if your prescription medication costs $100, your insurance covers $40, and you pay the remaining $60, you can deduct the $60 you paid out-of-pocket with the medical expense deduction.
Should You Claim Medical Expenses on Your Taxes?
To determine whether your medical expenses may be worth claiming on your taxes, consider whether you are filing separately or jointly. Sometimes, you may receive a larger medical expenses deduction if you are married and file separately. However, this can be risky if you lose other tax breaks as a result. However, filing jointly could mean you cannot deduct as much or any of your medical expenses due to your combined adjusted gross income (AGI).
For example, let’s say you pay $5,000 in medical bills during the year, and you and your spouse file jointly with a total AGI of $75,000. Only the amount of medical expenses that exceeds 7.5% is deductible. In this case, only expenses exceeding $5,625 are deductible, which means you cannot deduct any of your medical expenses.
However, if you file separately and your AGI is $35,000 while your spouse’s is $40,000, you can deduct your qualifying medical expenses that are greater than 7.5% of your $35,000 AGI. In this case, you could deduct the portion that exceeds $2,625. This means filing separately would give you a $2,375 tax deduction.
How to Claim Your Medical Expenses on Your Taxes
Instructions for how to claim the medical expense deduction are included on your tax forms when you file your return. In general, here are steps you need to take to prepare to claim these expenses.
1. Maintain Your Records
When it comes to taxes, maintaining good records is essential. Keep your medical bills and receipts. If there are any holes in your recordkeeping, ask for your records from your care providers or your pharmacy. Many taxpayers who claim this deduction are sick or have chronic medical issues. If this is your situation, keeping track of every health care expenditure is crucial.
2. Itemize on Your Tax Return
Next, rather than choose the standard deduction on your tax return, you will have to itemize to claim the medical expenses deduction. Though itemizing may mean you spend more time preparing your taxes, it can save you money if taking the standard deduction is less than itemizing. On the other hand, if taking the standard deduction will be greater than itemizing your deductions, you may want to save some time and select the standard deduction instead.
As of 2022, the standard deduction for a single taxpayer or married couples filing separately is $12,950. For married couples filing jointly, the standard deduction is currently $25,900. The standard deduction for heads of households is $19,400.
3. Use Schedule A
Finally, you will use Schedule A to calculate and claim your medical expense deduction. Follow the steps below to itemize your deductions on Schedule A:
- On line 1, report the annual total for your medical expenses.
- On line 2, report your AGI from your Form 1040.
- On line 3, record 7.5% of your total AGI.
- Subtract your medical expenses from 7.5% of your AGI and record this difference on line 4.
- Add the amount on line 4 to your other itemized deductions and subtract this amount from your AGI.
- Verify that this amount is greater than or equal to the standard deduction.
For example, if you are a single taxpayer, your itemization should exceed the standard deduction of $12,950. If it doesn’t, you should claim the standard deduction instead. As a rule of thumb, the medical expense deduction tends to be the most advantageous for taxpayers whose medical expenses are high relative to their income. If you believe you may qualify, do the calculations yourself or use online tax software that can perform the calculations for you.
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