Medical expenses can be quite costly, and take a lot of money out of your hands. Instead of deducting your hard earned cash from your wallet, consider taking a deduction of your unreimbursed medical expenses at tax time.
Beginning January 1, 2013, you are able to deduct your total medical expenses paid for you, your partner, and eligible dependents that exceeds 10% of your adjusted gross income. If you or your partner are age 65 or older, the limit is decreased to 7.5%, and remains in effect until December 31, 2016.
To determine your deduction, you’ll have to itemize your expenses and report them on a Schedule A of your Form 1040. Some deductible medical expenses include:
- Fees paid to a doctor, dentist, surgeon, chiropractor, psychiatrist, psychologist and nontraditional medical practitioners.
- Costs for in-patient care, including nursing home services, meals, and lodging in a health care facility.
- Acupuncture, rehab treatment, or smoking cessation program, as long as the treatment is prescribed by a doctor.
- Weight-loss treatment to help with a specific disease or medical condition, excluding the cost of special diet foods and health club memberships
- Insulin and prescription drug costs
- Prosthetic teeth, eyeglasses, contacts, hearing aids, wheelchairs, guide dogs, crutches or other medical supply
- Conference costs and transportation relating to a chronic disease from which you suffer, although meals and lodging at the conference are non-deductible
- Transportation costs to and from a hospital or other medical facility, subject to the standard regulations for travel expenses, including mileage rates
- Insurance premiums that cover medical care or long-term care. Employees shouldn’t deduct premiums paid to an employer sponsored plan unless the premiums are listed on your W-2 in Box 1.
Self-employed individuals may be eligible to take a deduction for self-employment insurance. Generally, it’s taken as an adjustment to income instead of an itemized deduction. If you can’t claim the entire cost of your self-employed medical insurance premiums, you can take the rest of your expense as an itemized deduction when you file your taxes.
Prescription drugs, including insulin and other over the counter drugs acquired through a prescriptions can be deducted as a medical expense. A dr. must provide a written or electronic order for the medication in compliance with all laws of the state where the expense is incurred in order for the deduction to qualify.
Funeral expenses, burial costs, over-the-counter drugs without a prescription, and personal use items such as toiletries are not eligible for deduction. You also can’t deduct nicotine gum or patches, or other smoking cessation devices without a written prescription.
You can only deduct medical expenses that you paid during the tax year in which you are filing your return. If you were reimbursed by any third party, regardless of whether it was paid directly to you or the doctor or hospital, you must subtract the reimbursement from your total expenses before deduction.