Costs associated with medical care expenses and insurance premiums can impose a heavy burden on individuals and families. Over the course of a year, such expenses can accumulate quickly, especially when undergoing treatments for serious illness. The IRS offers the provision of a medical tax deduction to those who will benefit from itemizing their deductions.
Features
Deductible medical expenses refer to the costs you pay to a legally recognized medical provider for a diagnosis, cure, alleviation, therapy or preventive treatment. These costs can include services or products received to treat any affected part or function of your body, such as dental or optometric care. Money paid for equipment, supplies and diagnostic devices can be included with your deductible medical expenses. Expenses related to general well-being, such as vitamins or a vacation, are not deductible. IRS Publication 502 provides an extensive list of medical services that are acceptable for tax deduction.
Considerations
Some of your costs may be indirectly related to obtaining medical care and can therefore be included in your deductible expenses. The IRS makes allowances for transportation and insurance premiums paid for medical services. Amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term insurance contract are considered acceptable medical expenses. Meal and lodging costs paid to a hospital or comparable organization that are directly associated to the provision of medical care services also qualify for deduction.
Reporting to the IRS
Medical expense deductions are reported on your Schedule A of Form 1040 along with other itemized deductions. The IRS restricts the amount of medical expenses that can be deducted to a certain percentage of your adjusted gross income (AGI). Any expenses beyond this percentage cannot be deducted. Any medical expenses paid within the reporting tax year can be claimed, regardless of when the services were rendered.
Dependents
Tax-deductible medical expenses can include payments issued for yourself, your spouse and any other dependents for which you have paid medical costs. To include these individuals' expenses, you must have been either married or in a dependent relationship at the time of services being provided or the payment issued. IRS Publication 502 outlines the specific requirements that must be met in order to qualify someone for dependent status.
Reimbursements
Deductible medical expenses include only the expenditures that were not reimbursed. Therefore, if you receive a reimbursement from insurance, Medicare or other organization to cover the costs of a medical service or product, the amount must be subtracted from the year's total medical expenses. Reimbursements made from a Health Reimbursement Arrangement (HRA) funded by an employer must also reduce total expenses. Payments received for loss of earnings or for permanent loss or use of a body function or limb are not considered reimbursements and therefore do not reduce total medical expenses, unless a portion is designated to cover medical costs.
Member Comments