Deductions: Medical and Dental Expenses
If you paid certain medical and dental expenses this year for yourself, your spouse, or your dependents (and were not reimbursed), you may be eligible to claim the medical and dental expenses deduction. Unfortunately, the hurdle for claiming this deduction is a high one — in order to claim a deduction for medical expenses, you must itemize deductions on Schedule A of your federal income tax return and your medical expenses must exceed 7.5% of your adjusted gross income (AGI).
Under the rules for divorced or separated parents, each parent can include the medical expenses he or she pays for a child even if the exemption for the child is claimed by the other parent.
What are medical care expenses?
If you itemize deductions on Schedule A, you may be able to deduct the unreimbursed medical care expenses you paid this year. Medical care expenses involve the diagnosis, cure, relief, treatment, or prevention of disease, and treatments affecting any part or function of the body. The medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness.
Medical care expenses include the premiums you paid for health insurance (if any), and amounts paid out of your pocket for treatment not covered by your health insurance. Medical care expenses also include amounts you pay for transportation to get medical care. In addition, limited amounts you paid for a qualified long-term care insurance contract may qualify as medical care expenses.
If requested by the IRS, you must be able to substantiate your medical and dental expenses deduction. Therefore, for each medical expense you claim, you must keep a record of the name and address of each person you paid, and the amount and date of the payment.
Treatment of reimbursements
You must reduce your total medical and dental expenses for the year by all reimbursements you received from insurance or other sources, including Medicare. Therefore, you can't include medical expenses that were paid by an insurance company.
In some cases, your insurance reimbursements may be more than your medical expenses (an "excess reimbursement"). If you pay the entire premium for your medical insurance, you generally don't include excess reimbursements in your income. If both you and your employer pay part of the premiums, and your employer's contributions to the premiums weren't included in your income, you must include in your income the portion of the excess reimbursement that represents your employer's contribution.
Jill is covered by her employer's medical insurance policy, and the annual premium is $2,000. Her employer pays $600 of that amount, and the balance of $1,400 is taken out of her wages. Therefore, Jill must include in her gross income 30% of any excess reimbursement she receives for medical expenses under the insurance policy ($600/$2,000 = 30%).
If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you generally must report the reimbursement as income up to the amount you previously deducted as medical expenses.
How do you calculate your deduction?
You can deduct only the amount by which your unreimbursed medical expenses exceed 7.5% of your AGI.
Mark's AGI is $100,000, and he incurred $6,000 of unreimbursed medical expenses this year. Although that's a substantial sum, none of it is deductible. His expenses must exceed $7,500 (which is 7.5% of his AGI) in order for the excess to be deductible. If Mark's expenses amounted to $8,500 this year, he'd be able to deduct $1,000 on Schedule A of his federal income tax return.
What kinds of medical care expenses are deductible?
IRS Publication 502 (Medical and Dental Expenses) contains a list of items that you can include in figuring your medical expense deduction. This list includes the following items (among many others):
- Ambulance service
- Contact lenses and related supplies
- Crutches
- Dental treatment expenses
- Eyeglasses and eye examinations
- Insurance premiums you pay for policies that cover medical care
- Laboratory fees
- Oxygen equipment
- Prescription drugs
You may also include the expenses you incur for smoking cessation programs and drugs prescribed to alleviate nicotine withdrawal. However, you can't include in your medical expenses amounts you pay for drugs that don't require a prescription (such as nicotine gum or patches).
If you're self-employed (e.g., a sole proprietor, partner, or 2% S corporation shareholder), you may be able to deduct up to 100% of the cost of health insurance that you provide for yourself, your spouse, and your dependents. This deduction is taken on the front of federal Form 1040 as an above-the-line deduction; it isn't limited to amounts over 7.5% of your AGI.
Deducting expenses for weight-loss programs
You can include in your medical expenses amounts you pay to lose weight if losing weight is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). If you've been diagnosed as obese, therefore, your deductible medical expenses can include fees you pay to join and attend a weight reduction group.
You can't include the cost of a weight-loss program in medical expenses if the purpose of the weight control is to improve your appearance, your general health, or your sense of well-being. Also, you generally can't include membership dues in a gym, health club, or spa.
Jack has an AGI of $50,000. This year, he incurred a total of $4,250 in unreimbursed medical expenses, which included $1,000 for his health club membership. Although Jack's expenses totaled more than $3,750 (7.5 % of his AGI), he may not take any deduction for medical and dental expenses because only $3,250 of his medical expenses qualified for deduction purposes.
What about the cost of diet food items? You can't include the cost of diet food items in your medical expenses if the food is a substitute for the food you normally consume to satisfy your nutritional needs.
Deducting your travel expenses
You can include in medical expenses amounts you paid for transportation that was primarily for, and essential to, medical care. For example, you can include your out-of-pocket expenses for your car, such as gas and oil, when you use your car for medical reasons. However, you cannot include depreciation, insurance, general repair, or maintenance expenses. If you do not want to use the actual expenses method, you can use a standard rate for use of your car for medical reasons. The standard rate is 21 cents per qualifying mile for 2024.
You can also include the cost of parking fees and tolls. You can add these fees and tolls to your medical expenses regardless of whether you use the actual expenses method or the standard mileage rate.
Deducting long-term care insurance costs
If you pay premiums for a tax-qualified long-term care insurance (LTCI) policy, you may be able to deduct all or part of your premiums. As usual, your total unreimbursed medical expenses — including your qualified LTCI premiums — must exceed 7.5% of your AGI and you must itemize. The maximum amount of LTCI premiums that you can deduct in a year depends on your age at the end of the year. Deduction limits (which are indexed each year for inflation) are as follows:
|
Age |
Limit on Deduction 2023 | Limit on Deduction 2024 |
|
40 or younger |
$480 | $470 |
|
41 to 50 |
$890 | $880 |
|
51 to 60 |
$1,790 | $1,760 |
|
61 to 70 |
$4.770 | $4.710 |
|
71 or older |
$5,960 | $5,880 |
If you pay long-term care costs on your own (out-of-pocket), you may also be able to deduct some costs. When figuring your medical and dental expenses deduction, you can include the cost of medical care in a nursing home or home for the aged for yourself, your spouse, or your dependents (including your parents or anyone else you claim as a dependent on your tax return). This includes the cost of meals and lodging in the home if the main reason for being in the home is to get medical care.
What about medical-related capital expenses and home improvements?
Generally, you can include in medical expenses amounts you pay for special equipment installed in your home if the main purpose of the equipment is medical care for you, your spouse, or a dependent. But what if you make a permanent improvement to your home for medical reasons? If the improvement does not increase the value of your property, the entire cost of the improvement may be included as a medical expense.
However, if a permanent improvement increases the value of your property, the cost of the improvement may be partly included as a medical expense. The cost of the improvement is reduced by the increase in the value of the property. The difference is a medical expense.
Assume you have severe asthma. On your doctor's advice, you install an elevator in your home so that you will not have to climb stairs. The elevator costs $8,000. An appraisal shows that the elevator increases the value of your home by $4,400. Therefore, you can include $3,600 as a home improvement medical expense ($8,000-$4,400).
Certain home improvements made to accommodate a disability typically do not increase the value of the home and may be included in full as medical expenses. These expenses include the following (among others):
- Constructing entrance or exit ramps for your home
- Widening doorways in your home
- Installing railings, support bars, or other modifications to bathrooms and other places
- Lowering or modifying kitchen cabinets and equipment
For more information, see IRS Publication 502 (Medical and Dental Expenses).
What kinds of medical and dental expenses are not deductible?
IRS Publication 502 (Medical and Dental Expenses) contains a list of some of the items that you can't include in figuring your medical expense deduction. This list includes the following items (among many others):
- Dancing lessons and swimming lessons (even if recommended by a doctor), if they are only for the improvement of general health
- Health club dues
- Maternity clothes
- Nonprescription drugs and medicines
- Personal use items ordinarily used for personal, living, or family purposes (e.g., toothbrush, soap)
- Vitamins and other nutritional supplements
- Unnecessary cosmetic surgery (e.g., rhinoplasty, liposuction, face lifts, and hair transplants)
You can include amounts you pay for cosmetic surgery necessary to improve a deformity arising from a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.
You cannot include premiums you pay for life insurance policies and disability income insurance policies.
