Medical and Dental Expenses Deductions
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You can take itemized deductions on your Form 1040, Schedule A from the Internal Revenue Service (IRS) for yourself, your spouse and your dependents – provided the total medical expenses exceed 10% of your adjusted gross income, or 7.5% if you or your spouse is 65 or older. The bad news is that you are spending that much on health care, you or someone in your family is really sick.
Defining Medical and Dental Expenses
Medical care expenses include:
- Diagnostic tests
- Prevention of disease
- Payments for treatments affecting any structure or function of the body
- Dental expenses
With the high cost of co-pays and prescription drugs these days, one illness or stay in the hospital can tip you over 10% of your gross income, especially if you have little or no insurance and have not been saving in a health-related Flexible Spending Account (FSA).
You can contribute up to $5,000 of pre-tax dollars annually in an FSA, but you must keep all receipts. And it is “use or lose it” if you don’t submit all your claims or a full $5,000 of claims by March 31st of the following year.
Medical and Dental Expenses that Can be deducted
A range of items can be deducted. Here are a few of the main ones:
1. Hospital admissions
2. Nursing home admissions
Deductions for associated costs, including room and board, will be provided as long as there is medical need
3. Payments of fees to:
- Doctors
- Dentists
- Surgeons
- Chiropractors
- Psychiatrists
- Psychologists
- Specialists
- Complementary and alternative medicine (CAM) practitioners, such as acupuncturists
4. Treatment for addiction, including nicotine, and all aids for withdrawal that require a prescription
5. Participation in a doctor-prescribed weight loss program – but this will not usually include special diet foods or health club memberships.
6. Payments for insulin
7. Prescription drugs
8. Attendance at a medical conference for a chronic disease you or a family member suffer from, minus meals and lodgings at the conference
9. Various assistive items
These include:
- False teeth
- Reading or prescription eyeglasses
- Contact lenses
- Hearing aids
- Crutches and other disability aids
- Wheelchairs
- A guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities
9. Travel expenses to and from a facility that offers treatment
These can include fares and costs for:
- Taxi
- Bus
- Train
- Ambulance
- Private car, including gas and oil, the standard mileage rate for medical expenses, which is 17 cents per mile in 2017, and the cost of tolls and parking
10. Insurance premiums
11. Long-term care insurance policy premiums you pay yourself above and beyond what is given to you as a benefit by your employer
Other Rules and Regulations about Medical and Dental Expenses
There are a few other rules and regulations to be aware of that have tax implications.
Over-the-counter medications
While you can’t deduct these on your taxes, they are eligible expenses under your FSA plan provided that your doctor writes you a prescription for them, such as allergy medicine, antacids and so on.
Self-employed persons
here’s where many legal nurse consultants come in. If you’re self-employed and are showing a profit for the year, you may be eligible for the self-employed health insurance deduction. This is an adjustment to income, rather than an itemized deduction. Eligible expenses include:
- Premiums you paid on a health insurance policy covering medical care
- A long-term care insurance policy
- Premiums and policies as above for your spouse and children
- Certain medical expenses related to any child under 27, even if they don’t live with you
To determine whether an expense is deductible, use the free tool at the IRS.
You will need various personal tax data in order to use the tool correctly.
Listen to Accountant Amy Andersson’s podcast with Pat Iyer at Legal Nurse Podcast. She provides a lot more details about deductible expenses.