Taxes and Health Care: Deductible Medical and Dental Expenses
Some medical costs are tax-deductible while others aren’t. Here’s how to tell the difference.
The U.S. tax code can be confusing, but it makes some generous provisions for health care. You can’t claim everything, but there is plenty that you can. The list is long and contains things that might surprise you, such as home renovations for a person who is handicapped.
There is also a health care deductible to keep in mind. You qualify for it if you spend more than 7.5 percent of your salary on health care. After that, any valid medical expense can be deducted from your income.
The smaller your income, the easier it is to get your deductible. If you earn $25,000, for instance, you only need to spend $1,875. After that, all out-of-pocket expenses can be deducted. But if you earn $100,000, you’ll need to plop down a hefty $7,500 to get it.
The IRS uses precise guidelines to determine what is valid. If your care meets one of its criteria, you can apply your costs toward your deductible. To be counted, the money must be used for:
- Disease prevention
- Treatment of a specific illness or injury
- Necessary medical equipment
- Supplies and/or diagnostic devices
- Mental health care
- Dental care
- Some health insurance premiums
- Transportation for medical care
- Qualified long-term care
- Prescription medicines
Some expenses are obvious, but others might surprise you. An ambulance ride to the emergency room is clearly deductible. But if you go by bus or taxi, those fares can be counted too. And if you drive yourself, jot down the mileage, bridge tolls and parking fees. Those can also be claimed.
That’s why it’s important to keep meticulous records throughout the year. Any non-reimbursed health-related expense could potentially earn you a deduction.
The expense doesn’t have to be your own. Money spent on a spouse or other dependents counts, too. In fact, a few trips to the family doctor may be enough to get you that deduction.
You can easily get it if you or a family member needs specialized care. For starters, you can claim all your clinical and pharmacy copayments. But you might also have to travel out of town. If you take a dependent to see a specialist, include the cost of air fare and $100 a night for lodging.
Meeting your deductible need not be that dramatic, though. You might just have enough ordinary expenses for it. Hang on to your receipts when you have to pay for:
- A pregnancy test kit
- Birth control pills
- Contact lenses and saline solution
- An annual checkup
- Physical or psychological therapy
- A weight loss program for a medical condition
- Laser eye surgery
What doesn’t qualify?
On the other hand, some expenses are not deductible. You can’t count anything that enhances your overall health, like a gym membership or swimming lessons. Cosmetic surgery isn’t allowed, either. You also must exclude payments for:
- Hair transplants and electrolysis
- Over-the-counter medicines
- Cosmetic dental procedures and tooth whiteners
- Medicine obtained outside the U.S.
- Vitamins and nutritional supplements
- Funeral and burial costs
- Any employee-sponsored health insurance premiums
- Any medical costs covered by an insurer or someone else
To get the full list of what is and isn’t deductible, go straight to the source. Contact the IRS and ask for a copy of Publication 502. Or view it online at the agency’s Web site. You may be surprised by what you find.