Do You Qualify for a Medical or Dental Expense Deduction?

Source: Thinkstock
Source: Thinkstock

Are you on a first-name basis with your local emergency room staff? Then you probably have something in common with the millions of Americans who are struggling to pay off medical bills. A recent National Health Interview Survey found that during the first six months of 2014, among those under the age of 65, about 47.7 million patients (17.8%) were experiencing difficulty paying medical bills. Furthermore, a Consumer Financial Protection Bureau report found that roughly 43 million have a past-due medical debt listed on their credit reports.

If you spent an arm and a leg on medical expenses last year for yourself, your spouse, or your dependents, you might be able to take advantage of a tax deduction. The Internal Revenue Service says medical expenses “include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure of the body.” Here are four tips about qualifying for this deduction.

 1. Know which expenses apply

You will have to itemize your deductions on Form 1040, Schedule A.  Note that only allowable unreimbursed expenses apply. These include payments or fees to doctors, prescription drugs, and participation in a weight-loss program for a specific disease diagnosed by a physician. You can get a full list of qualifying medical and dental expenses when you read IRS Publication 502, Medical and Dental Expenses.

On its website, the IRS writes, “You can only include the medical expenses you paid during the year and you can only use the expenses once on the return. You must reduce your total deductible medical expenses for the year by any reimbursement of deductible medical expenses and expenses used when figuring other credits or deductions. This is true whether you receive the reimbursement directly or if it is paid directly to the doctor, hospital or other medical provider.”

2. Take note of how much you spent

In order to qualify for this deduction, your total medical and dental expenses must surpass 10% of your gross adjusted income (this can be found on Form 1040, line 37). If you or your spouse are 65 or older, you are eligible if your total health care expenses surpass 7.5% of your gross adjusted income.

3. Know what you cannot deduct

Ineligible expenses include those for a funeral or burial, medications purchased over the counter, and toiletries. If you recently got some work done to improve your looks, you won’t be able to count that toward your medical costs for the year. The IRS states on its website that taxpayers are not allowed to deduct costs related to cosmetic surgery. Deducting payments for nicotine gum or patches that don’t require a doctor’s prescription is also not permitted.

4. Don’t forget deductions for the self-employed

Did you work for yourself last year? If you worked for yourself and had a net profit, the IRS says you may be eligible for a self-employed health insurance deduction for yourself, your spouse, or a dependent. Note that you’ll claim the deduction as an adjustment to income on Form 1040 as opposed to an itemized deduction. You can get additional information on medical and dental expense deductions by logging on to the IRS website and taking a look at Can I Deduct My Medical and Dental Expenses?
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