Are you wondering if you can lower your tax bill with medical and dental tax deductions? Many people can, but it’s important to know the rules.
Understanding these tax deductions can save you money, especially if you had high healthcare costs. The IRS lets you deduct some medical expenses, but there are limits. Let’s break down how you might benefit from deducting your medical care costs.
Can I Claim Medical Expenses? Key Rules to Know
So, how do you know if you qualify? There are two main rules you need to meet.
The 7.5% AGI Rule
First, you can only deduct medical expenses that are more than 7.5% of your Adjusted Gross Income (AGI). Think of AGI as your total income minus certain adjustments. You calculate 7.5% of your AGI, and only the medical expenses above that amount are potentially deductible.
For example, let’s say your AGI is $50,000. 7.5% of that is $3,750. If you had $6,000 in qualified medical expenses, you could potentially deduct $2,250 ($6,000 – $3,750). If your expenses were $3,000, you couldn’t deduct anything because they don’t meet the threshold. This rule applies to the total expenses you paid during the tax year.
Itemizing vs. Standard Deduction
Second, you must choose to itemize deductions on your tax return using Schedule A (Form 1040). You can’t claim the medical expense deduction if you take the standard deduction.
Is itemizing right for you? You need to compare your total itemized deductions (including medical, state/local taxes, mortgage interest, charity) to the standard deduction for your filing status. For the 2024 tax year, the standard deduction amounts are:
- Single: $14,600
- Married Filing Jointly: $29,200
- Married Filing Separately: $14,600
- Head of Household: $21,900
If your total itemized deductions are higher than your standard deduction, itemizing usually saves you money. If not, you’re likely better off taking the standard deduction.
What Are Deductible Medical and Dental Expenses?
Okay, so what costs actually count? The IRS defines medical care expenses broadly. They include costs to diagnose, treat, cure, or prevent disease, or costs for treatments affecting any part of the body. You can only deduct expenses that weren’t paid back by insurance or paid with pre-tax money (like from an FSA or HSA). These are often called unreimbursed medical expenses.
Common Deductible Medical Expenses
Here are many common medical expenses that are often tax deductible:
- Payments to doctors, dentists, chiropractors, psychologists, etc.
- Hospital stays and nursing home care
- Prescription drugs and insulin
- Glasses, contacts, hearing aids, crutches, wheelchairs
- Non-cosmetic surgeries
- Dental treatments: Cleanings, fillings, braces, dentures, X-rays (This is a key dental expense area)
- Eye exams and vision correction surgery like LASIK
- Addiction treatment and specific weight-loss programs prescribed by a doctor
- Travel costs for medical care (like mileage or bus fare)
- Health insurance premiums (if paid with after-tax money) and part of long-term care premiums (limits apply)
- Guide dogs or other service animals
- Home improvements for medical reasons, like mobility ramps and lowered cabinets
What’s *Not* Tax Deductible?
Not every health-related cost is a deductible medical expense. Things generally *not* allowed include:
- Cosmetic surgery (unless needed to fix a deformity)
- Over-the-counter medicines (except insulin)
- General wellness items like vitamins or gym memberships (unless prescribed for a specific condition)
- Toothpaste, toiletries
- Funeral costs
- Any expenses paid or reimbursed by insurance or from pre-tax accounts (FSA/HSA)
How to Claim the Medical Expense Deduction
Ready to figure out your deduction? Here’s a simple process:
- Keep Good Records: Gather all your medical and dental expense bills, receipts, and insurance statements for the tax year.
- Calculate Qualified Costs: Add up all your eligible unreimbursed medical expenses. Remember to subtract any insurance reimbursements.
- Find Your AGI: Look up your Adjusted Gross Income on your Form 1040.
- Calculate Your Threshold: Multiply your AGI by 7.5% (or 0.075). This is the amount your expenses must exceed.
- Figure Your Deduction: Subtract the 7.5% threshold amount from your total qualified unreimbursed medical expenses. If the result is positive, that’s your potential medical expense deduction.
- Decide How to File: Compare your total itemized deductions (including this one) to your standard deduction.
- File Schedule A: If you choose to itemize deductions, report your medical expense deduction on Schedule A and attach it to your tax return.
Other Things to Keep in Mind
- Whose Expenses? You can usually include medical expenses you paid for yourself, your spouse, and your dependents.
- Self-Employed? If you’re self-employed, you might be able to deduct health insurance premiums differently, without needing to itemize or meet the 7.5% threshold. Talk to a tax professional about this.
- Bunching Expenses: Sometimes, it helps to schedule non-urgent medical or dental care in a single tax year. This “bunching” might help your total expenses exceed 7.5% of your AGI, making the deduction worthwhile.
- Illinois Residents: Good news! Illinois generally follows the federal rules for this deduction on your state income tax return. You’ll likely need your federal Schedule A when filing your state return.
Frequently Asked Questions (FAQ)
Q1: Can I deduct the premiums I pay for my health insurance?
A: Yes, usually you can include health insurance premiums you paid with *after-tax* dollars as part of your medical expenses. Premiums paid through work with pre-tax money, or premiums for which you took the self-employed health insurance deduction, cannot be included here. There are also limits on deducting long-term care insurance premiums based on age.
Q2: What about travel costs for medical care? Are those deductible?
A: Yes, you can often deduct transportation costs needed for medical care. This includes mileage on your car (use the standard medical rate set by the IRS), bus or taxi fares, parking fees, and tolls. If you travel away from home for care, lodging costs might be deductible up to $50 per night, per person, under certain conditions.
Q3: Are costs for things like vitamins or gym memberships deductible medical expenses?
A: Generally, no. Expenses for general health improvement, like vitamins or gym memberships, are not tax deductible. However, if a doctor specifically prescribes something like a weight-loss program to treat a diagnosed condition like obesity or hypertension, those costs might qualify.
Q4: Does the Child Tax Credit or Earned Income Tax Credit affect my medical expense deduction?
A: No, the Child Tax Credit and the Earned Income Tax Credit are separate tax credits and do not directly impact the calculation or eligibility for the medical expense deduction. They reduce your tax liability differently than deductions reduce your taxable income.
Need Help with Your Medical and Dental Tax Deductions?
Whew! That’s a lot to digest. Claiming the medical and dental expense deduction involves specific rules and calculations. Remembering the 7.5% AGI threshold and the need to itemize deductions is key.
Keeping good records and understanding which medical expenses qualify can make a difference on your tax return. If your head is spinning, don’t worry!
Our knowledgeable tax professionals are here to help. We can review your situation, help determine your qualified medical expenses, and see if claiming this tax deduction makes sense for you.
Contact us today to discuss your medical and dental tax deductions!
