In an era of rising healthcare costs, every dollar of tax relief counts. The IRS medical expense deduction is one of the most significant but underutilized tax breaks available, especially for seniors and those with chronic health conditions. Many taxpayers miss out simply because they don’t realize what expenses qualify or how to claim them. This guide will walk you through everything you need to know to claim every health-related deduction you are entitled to.
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The Golden Rule: Understanding the 7.5% AGI Threshold
Before you can deduct anything, you must understand the most important rule. You can only deduct the amount of qualifying medical expenses that is more than 7.5% of your Adjusted Gross Income (AGI). You must also itemize your deductions on Schedule A to claim it.
How the Calculation Works:
Example: Let’s say your AGI for the year is $60,000.
- Calculate your threshold: $60,000 x 7.5% = $4,500.
- Add up your total qualifying medical expenses for the year. Let’s say they total $9,000.
- Subtract the threshold from your total expenses: $9,000 – $4,500 = $4,500.
In this scenario, you could claim a medical expense deduction of $4,500.
The Ultimate Checklist: What Medical Expenses ARE Deductible?
The list of qualifying expenses is broader than most people think. It’s crucial to track all of these costs throughout the year.
Insurance Premiums
This is a major category that is often overlooked. You can deduct premiums for:
- Health and dental insurance paid with after-tax dollars.
- Medicare Part B and Part D premiums.
- Medicare Advantage and Medigap (supplemental) plan premiums.
- Qualified long-term care insurance premiums (subject to age-based limits).
Professional Services and Treatments
- Payments to doctors, dentists, surgeons, chiropractors, optometrists, and psychologists.
- Payments for hospital care, nursing home services (if primarily for medical care), and in-home medical care.
- Physical therapy, acupuncture, and smoking-cessation programs.
Medical Equipment, Supplies, and Prescriptions
- Prescription medications and insulin.
- Eyeglasses, contact lenses, hearing aids, and dentures.
- Wheelchairs, walkers, crutches, and other durable medical equipment.
Travel and Transportation
You can deduct the cost of traveling primarily for medical care. This includes the IRS standard mileage rate for using your car, plus parking fees and tolls. Bus, train, or taxi fare also qualifies.
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What Does NOT Qualify as a Medical Deduction?
Just as important is knowing what you can’t deduct. Generally, non-deductible expenses include:
- Non-prescription drugs (except insulin).
- Cosmetic surgery that is not medically necessary.
- General health and wellness costs like gym memberships or vitamins.
- Health insurance premiums paid by an employer or with pre-tax funds.
Disclaimer: This guide provides general information and is not a substitute for professional tax advice. The rules for medical deductions can be complex. Please consult with a qualified tax professional to ensure you are claiming all the expenses for which you are eligible.
