Unplanned for or uncovered medical expenses can quickly eat up your savings account and leave you scrambling to make ends meet. In fact, medical expenses even cause bankruptcies for a certain portion of Americans hit with high costs. One way to ease some of the pain of medical expenses is to write them off against your taxes.
The IRS permits you to deduct qualifying medical expenses against your taxes, however, those costs have to meet a certain threshold before you can start deducting. This is called the AGI (adjusted gross income) threshold and the total of all your qualifying medical and dental expenses have to be greater than 10% of this number for you to claim them as a deduction.
Any medical costs for you, your dependents, or your spouse qualify for the deduction, but keep in mind that any amount you're reimbursed by insurance does not qualify for the deduction. For your medical expenses to qualify, they will need to have been paid during the calendar year. This means that if you paid by check–for example–the date it's delivered will usually be the qualifying date of payment.
In general, most legitimate medical expenses will qualify for the deduction, however, here are some tax deductible medical expenses that you may not have known about:
Capital expenses are those incurred when you have to modify your home in order to accommodate special equipment for medical reasons. Things like wheelchair ramps, widening doorways to accommodate wheelchairs or walkers, modifying the washroom to add support bars or railings, lowering kitchen cabinets, and more. If these are permanent improvements that end up increasing your property's value, then you need to calculate the increase in value and deduct that from the cost of the improvement that you can deduct from your taxes. There is a specific worksheet that you can use to calculate these costs. Of course, these expenses can only be for actual medical reasons and any aesthetic improvements are not covered.
Some travel costs related to medical expenses can be deducted from your taxes. Things such as ambulance fees, public transportation fees, tolls, parking costs, and more. If you have been using your own car, you can deduct a certain amount per mile placed on the car. This can change, so it's important to check what the mileage costs are before deducting it.
If you require nursing services, the wages you pay for this service are tax deductible. However, you don't actually need a nurse to provide the services, so long as it's something a nurse would regularly do, like changing dressings, giving medication, and helping the patient bathe. If the nurse or person providing nursing services also performs household tasks, then you can only deduct the expenses for the nursing.
Supplemental Medical Insurance
Premiums paid towards supplement plans for medicare are medical expenses and can be tax deductible. Each type of supplemental plan has its own rules for writing off premiums which you must review before submitting the premiums as a deductible expense. For example, Medicare A premiums are not an eligible medical expenses if you are covered under Social Security. https://www.irs.gov/pub/irs-pdf/p502.pdf
If you require a service animal, the expenses related to the buying, training, and maintenance of the service animal are tax deductible. This can include things like food, grooming, vet care, and usually any other reasonable costs related to keeping your service animal healthy to perform its duties.
If you attend a medical conference that is related to a chronic illness you, your spouse, or your dependents have, then the costs of that conference are tax deductible. This can include the admission and transportation to the conference. However, the conference has to be mainly for the medical care of yourself, your spouse, or dependents and most of the time you spend at the conference has to be in sessions on medical information.
Sometimes, a doctor may recommend that your child receive specialized tutoring or schooling by a person or institution trained in teaching children with mental or physical impairments. These specialized tutors or schools are often quite expensive and can be difficult for parents to afford. This is why you can include things like tuition, meals, and lodging costs for attending this school as part of your tax deductible medical expenses. For the costs to be tax deductible, a doctor has to specifically recommend this particular type of schooling and helping to overcome the learning disability has to be the main reason your child is attending the school.
Weight Loss Programs
If you are obese or have hypertension or heart disease caused by being overweight and are told you need to lose weight by a doctor, then the fees you pay to join a weight reduction group may be tax deductible. However, these don't include things like gym memberships, the cost of diet foods, and only some specialty foods that have been recommended for weight loss and are not meant to treat an illness.
In general, cosmetic surgery is not covered and cannot be claimed as medical expenses. Aesthetic surgery or elective cosmetic surgeries that are only undergone for the sake of appearances don't qualify as medical expenses. However, if the cosmetic surgery is due to an illness or accident, it may be covered under reconstructive cosmetic surgery. This would include things like breast reconstruction after a partial or full mastectomy, or reconstructive surgery after a car accident.
The list of what is and isn't covered as a deductible medical expense is a long one, with many variables. Because of this, it's important to keep all receipts related to any and all medical expenses that you may accrue throughout the year and compare it against the list of approved, tax deductible medical expenses provided by the IRS. You may be surprised to find that over the course of the year, you end up with a surprising amount of medical expenses that can slash your tax bill. There are also a surprising number of wellness programs (outside of weight loss) that may be tax deductible. People are often surprised to learn that even things like smoking cessation programs, and removing lead-based paint can be considered tax deductible, which is why it's so important to check the list and keep good records.