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Medical Expenses – To Deduct or not to Deduct?
December 3, 2016
Healthcare, medical insurance, and the costs of care are complicated, to begin with, especially when there are unexpected medical expenses. And figuring out if, and what, medical expenses can be included in your tax deductions doesn’t make things easier. You may not have even been aware that some medical expenses can be deducted!
Here’s what you need to know to get started, though:
What medical expenses can be deducted? The list is long and expansive (everything from acupuncture to x-rays), but in general medical expenses related to preventive care, treatment, surgeries, as well as dental and vision care are included. The full list from the IRS is available here.
What about other related costs, such as appliances or travel? Other items, such as prescription medication, or appliances, such as contacts, hearing aids, and wheelchairs, are also deductible. Additionally, some travel expenses can also be included, such as mileage on your car, bus fare, and parking fees. You can even include travel expenses related to attending a conference regarding your medical condition.
Is there anything that’s not deductible? If you’ve been reimbursed by your insurance or employer for any medical expenses, those cannot be deducted. In general, most cosmetic procedures are not deductible either, though some are handled on a case-by-case basis. Also, items related to general health and wellbeing, such as toothpaste, gym membership, vitamins, etc. are not included in the list.
How much can I claim? The IRS states that qualified medical expenses must exceed 10 percent of your adjusted gross income for the year in order to be deducted. If your adjusted gross income is $35,000 then your expenses must exceed $3,500. For instance, if you have $4,550 in medical expenses, then $1,050 of them can be deducted.
How do I claim these expenses? You must itemize deductions in order to claim medical expenses. These can be included on Form 1040, Schedule A under your deductible expenses.
The most important thing is to make sure you exceed the 10 percent threshold before you start considering claiming medical expenses as a tax deduction. While the full list is comprehensive, it’s worth looking through it all or speaking with your tax advisor to make sure you’re receiving the maximum benefits.