Medical Expense Tax Deductions: What You Need to Know

Health and medical expenses for you and your dependents can add up quickly and eat at your budget. It can be really hard to plan ahead, especially when unexpected emergencies occur that might not be covered by your insurance. 

However, the IRS allows for some relief. Many of these expenses are partly tax-deductible and it is important to know how to take advantage of these deductions, from what is deductible to how you need to file in order to claim them.

What is the medical expense deduction?

The IRS allows taxpayers to deduct the qualified unreimbursed medical care expenses for the year that exceeds 7.5% of their adjusted gross.

If you have an adjusted gross income of $50,000 and $10,000 in total deductible medical expenses, 7.5% of $50,000 is $3,750. You can deduct $6,250 of medical expenses as part of your itemized deductions.

The total itemized deductions need to exceed the standard deduction for the taxpayer’s filing status. For example, a married filing jointly taxpayer needs to exceed $25,900 in itemized deductions for the medical expenses to be truly deductible.

Which medical expenses are tax-deductible?

The expenses must be legal in the U.S. and for yourself, your spouse or a dependent, or a family member that would be a dependent but they either make more than the minimum taxable income or they are the dependent of the other parent or relative.

In general, medical expenses include (but are not limited to):

• Medical Copays - Payments to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and other medical practitioners for preventative care, surgery, dental or vision care, x-rays, lab fees, and more
• Prescriptions - Including insulin & medical devices such as hearing aids, dentures, wheelchairs, crutches, etc.
• Payments made for a treatment facility including addiction services
• Payments for in-hospital care, including lodging and meals
• Payments for in-home health care and visiting health professionals
• Dental expenses including braces and dentures
• Eye exams, prescription glasses, and contact lenses, and associated cleaning supplies
• Acupuncture
• Weight loss programs for doctor-diagnosed diseases
• 18 cents per mile for all miles driven January 1 through June 30, 2022 and 22 cents per mile from July 1, through December 31, 2022 for medical purposes including; back and forth for office visits, medical tests, prescriptions, etc.
• Cost of health, dental, and vision policies
• Insurance premiums not covered by your employer
• The cost of qualified long-term care services can often be included as medical expenses. This would include the cost of a visiting nurse, cost of medical home renovations, daily treatments, and other such necessary expenditures. In addition, a portion of your long-term care insurance premiums is deductible as a health insurance payment.

This list is not exhaustive but does give a general idea of the items allowable as deductions. In general, so long as the provided service is legal in the United States and promotes and maintains the health and wellbeing of a taxpayer, it is considered a valid health deduction. IRS Publication 502, gives a very in-depth list of deductible and nondeductible expenses.

What does not qualify as a tax-deductible medical expense?

Examples of medical expenses that do not qualify for tax deductions include:

• Any medical expenses for which you are reimbursed by either insurance or employer
• Cosmetic or elective surgeries
• Non-prescription/over-the-counter medications, vitamins, toiletries, cosmetics, nicotine gum, etc.
• Funerals/burial services
• Medical expenses in a foreign country that are not legal in the U.S.

How to claim the medical expense deduction

In order to claim the medical expense deduction, you must itemize deductions rather than take the standard deduction (you should only do this if your itemized deductions are greater than your standard deduction)

To itemize you’ll need to fill out IRS Form 1040 and attach Schedule A to calculate your deduction.

What if I have a Health Savings Account (HSA)?

You do not need to itemize deductions to claim a deduction for contributing to a Health Savings Account (HSA). What you do need to do is keep track of total medical expenses paid. As long as your payments from an HSA are used to pay for qualified health and medical services, you won’t be taxed on the money you contribute.

Maximize your Deductions

Overlooked Deductions

There are many medical expenses that are often overlooked and may be included as a tax deduction, such as birth control pills, glasses, artificial limbs or hearing aids, qualifying dental expenses, and even smoking cessation drugs or programs.

Weight Control Treatment

In general, weight loss treatments (such as gym memberships or gym equipment) are not considered tax-deductible. However, for diagnosed illnesses such as obesity, certain prescribed programs to treat or cure certain diseases are allowed. This does not include payment for certain types of food or health club membership dues.