Medical expenses can be a significant financial burden, but the good news is that some of these costs may be tax-deductible. If you itemize deductions on your tax return, you can claim a wide range of qualifying medical expenses to lower your taxable income. In this article, we will explain which medical expenses are tax-deductible, how to maximize your savings, and what the IRS requires for you to claim these deductions.
What Are Medical Expenses?
Medical expenses are costs associated with the diagnosis, treatment, or prevention of disease and the promotion of general health. These expenses may include everything from doctor visits and hospital stays to prescription medications and medical equipment. However, not all health-related costs are deductible, so it’s important to understand what qualifies.
The IRS allows taxpayers to deduct the portion of their medical expenses that exceeds a certain percentage of their adjusted gross income (AGI). For the tax year 2024, this threshold is 7.5% of your AGI. This means that if your medical expenses surpass 7.5% of your AGI, you can deduct the amount above this percentage.
For example, if your AGI is $50,000 and your medical expenses total $5,000, you can only deduct the portion of your expenses that exceeds $3,750 (7.5% of $50,000). In this case, you could deduct $1,250 ($5,000 – $3,750).
What Medical Expenses Are Tax-Deductible?
Now that you understand the general rules for deducting medical expenses, let’s take a look at the types of expenses that qualify. The IRS provides a list of deductible medical expenses, including:
- Doctor and Dentist Visits
Any fees you pay for medical care provided by a licensed physician, dentist, or specialist are deductible. This includes routine checkups, emergency treatments, and consultations with medical professionals. - Hospital Stays
If you or a dependent are hospitalized, the costs of hospital services, including room charges, surgery, and diagnostic tests, are deductible. This also includes expenses related to inpatient care. - Prescription Medications
The cost of prescription drugs and medications prescribed by a doctor for treating a medical condition is deductible. However, over-the-counter medications are generally not deductible unless prescribed by a doctor for a specific medical reason. - Medical Equipment and Supplies
Medical devices such as hearing aids, wheelchairs, crutches, and prosthetic limbs may be deductible. Additionally, items like bandages, diagnostic devices, and blood pressure monitors can qualify as deductible medical expenses if prescribed by a doctor. - Health Insurance Premiums
Health insurance premiums, including those for medical, dental, and long-term care insurance, may be deductible. This includes premiums paid through your employer (if not already deducted from your paycheck) or premiums you pay directly as an individual. - Long-Term Care Services
If you are paying for long-term care for yourself or a dependent, these expenses may be deductible. This can include costs associated with nursing homes, assisted living facilities, or home health care. - Medical Transportation
If you have to travel for medical care, you can deduct the costs associated with transportation, including mileage, bus fare, or tolls. However, only travel expenses related to medical care are deductible. - Physical Therapy and Rehabilitation
Physical therapy services that are medically necessary are deductible, including treatments for recovering from surgery or managing chronic conditions. - Mental Health Care
Expenses related to mental health treatments, such as therapy sessions or psychiatric care, are deductible if prescribed or recommended by a medical professional. - Acupuncture and Chiropractic Treatments
Alternative medical treatments, such as acupuncture or chiropractic care, are deductible if they are for the treatment of a specific medical condition and prescribed by a licensed practitioner.
What Medical Expenses Are Not Tax-Deductible?
While many health-related expenses are deductible, there are also a few that are not. These include:
- Cosmetic Procedures: Cosmetic surgery or procedures that are not medically necessary are not deductible.
- Over-the-Counter Medications: Unless prescribed by a doctor, over-the-counter drugs are not deductible.
- General Health and Fitness: Expenses related to general health and fitness, such as gym memberships or vitamins, are not deductible.
- Non-prescribed Medications and Supplements: If a medication is not prescribed by a doctor or is considered a supplement, it generally cannot be deducted.
How to Maximize Your Medical Expense Deductions
If you are planning to claim medical expenses as deductions, there are a few strategies to maximize your tax savings:
- Keep Detailed Records
It’s important to keep track of all your medical expenses throughout the year. This includes receipts for doctor visits, medications, hospital stays, and any other qualifying medical costs. You will need to provide proof of these expenses when filing your tax return. - Bundle Medical Expenses
If your medical expenses are close to the 7.5% threshold, consider bundling medical expenses into one year. For example, you might pay for elective treatments or purchase medications in a single year to push your expenses above the threshold. - Use a Health Savings Account (HSA)
If you have a high-deductible health plan and contribute to an HSA, you can use the funds in the account to pay for qualified medical expenses. Contributions to an HSA are tax-deductible, and withdrawals for eligible expenses are tax-free. - Consider Itemizing Deductions
In order to benefit from medical expense deductions, you must itemize your deductions on your tax return instead of taking the standard deduction. This is only beneficial if your total itemized deductions exceed the standard deduction.
Medical expenses can place a significant strain on your finances, but understanding which expenses are tax-deductible can help reduce your tax burden. By keeping careful records and planning ahead, you can maximize your deductions and lower your taxable income. Whether you’re paying for doctor visits, prescription medications, or health insurance premiums, claiming medical deductions can help you save money when filing your taxes.
If you’re unsure whether your medical expenses qualify for deductions or need help itemizing your deductions, our team is ready to assist you. Contact us today to schedule a consultation and ensure you’re taking advantage of all available tax benefits.
Call us at (786) 310-5582 or email us at [email protected].
