Even with good insurance and a low deductible, no one truly enjoys paying medical bills. One bright side to big bills is the opportunity to claim your medical expenses as a deduction on your tax return, as long as your bills are greater than 7.5% percent of your tax year’s *adjusted gross income and you can itemize your deductions. The medical expense deduction not only applies to your medical expenses, but it also applies to your spouse and dependent’s medical expenses.
If your medical procedures cost you more than 7.5% of your income, follow the next five rules to maximize your tax refund.
*Note, adjusted gross income (AGI) is your gross income like wages, salaries, or interest minus adjustments for eligible deductions like student loan interest or your IRA deduction. Your AGI can be found on line 11 of your 2023 Form 1040.
Medical Isn’t Just ‘Medical’
The IRS allows tax deductions for dental care and vision, in addition to medical expenses. This means you can potentially deduct eye exams, contacts, glasses, dental visits, braces, false teeth, and root canals.
What else is available for medical deductions? Preventative care and surgeries, psychiatric and psychological treatment, prescription medicine and medical devices – such as hearing aids and in-home medical equipment – all fall under the medical expenses deduction..
You’re even allowed to deduct the cost of your monthly insurance payments if they are not paid pre-tax through an employer-provided plan, as well as travel expenses to and from the doctor. The medical expense deduction includes medical expenses you pay for yourself, your spouse, and dependents.
Before you file, you need to know what isn’t tax deductible. As with all things tax-related, you can’t double dip on your tax benefits.
You cannot claim deductions for any expenses that you were reimbursed for – either by your insurance or your employer. If you’re using a medical pre-payment plan, or some other medical reimbursement plan to help with expenses, you can’t claim those expenses as deductions.
It’s also important to know that you can’t claim cosmetic surgery as a medical deduction unless that surgery was part of a life-saving procedure or some other serious health matter. Other non-deductible items include every-day or non-prescription health supplies like toothpaste, soap, vitamins, or over-the-counter pain relievers.
You Can Deduct Medical Expenses if You Itemize Your Tax Deductions
Like the headline says, to receive the benefits of the medical expense deduction, you have to qualify to itemize your deductions on your taxes, so your itemized deductions like home mortgage interest, state income taxes, property taxes, along with deductible medical expenses have to be more than the standard deduction. For the tax year 2023 (the taxes you file in 2024), the standard deduction is $13,850 single, $20,800 head of household, and $27,700 if married filing jointly. You can’t take the standard deduction and claim the medical expense deduction at the same time.
If you are self-employed, you can deduct your health insurance premiums even if you don’t itemize your deductions.
Pay Your Bills
You know those medical bills that you want to deduct from your income? When did you pay them? As far as Uncle Sam is concerned, you can only deduct medical expenses if they were paid within the tax year in which you are filing a return. You can’t claim expenses from the previous year or future expenses. If you used a credit card to pay medical bills in the tax year, then that would count as being paid within the year and would be deductible.
Track Those Miles
Traveling back and forth to all those appointments counts. For 2023, the medical mileage rate is 22 cents per mile. Trips to pick up prescriptions, dental appointments, follow up appointments, emergency visits, and more are all included. Don’t miss out on this valuable deduction.
If you’ve incurred medical expenses during the tax year, it might be worth maximizing your deductions and taking itemized deductions. Especially if your itemized deductions bump you over the standard deduction.
Don’t worry about knowing these tax rules. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.
TurboTax Answers Most Commonly Asked Tax Questions
33 responses to “What Medical Expenses are Tax Deductible?”