According to the IRS, medical expenses include the “costs of diagnosis, cure, mitigations, treatment or prevention” of an injury or disease. And dealing with these costs can be a challenging part of life.
But what many taxpayers may not realize is that there are specific tax laws governing the deduction of certain medical expenses to help you save.
Understanding these regulations is essential to ensure you’re maximizing your tax benefits while staying compliant with the law. Here’s a rundown of the basic rules:
Flexible spending accounts (FSAs). An FSA is a tax-advantaged account offered by some employers to help alleviate qualified health-related expenses like prescriptions or eyeglasses. This type of account has a “use-it-or-lose-it” feature, so any money leftover at the end of the year will be forfeited. Keep that in mind when allocating how much to contribute for the year.
Medical and dental deductions. Medical and dental expenses that aren’t reimbursed by your insurance may be deducted to the extent your annual total exceeds 7.5% of your adjusted gross income.
To qualify for medical deductions, you must also itemize. When adding up your medical costs, be sure to include the cost of traveling to your doctor or medical facility for treatment. If you go by car, you can deduct a flat mileage rate, adjusted by the IRS each year, or you can keep track of your actual out-of-pocket expenses for gas, oil, repairs, parking and tolls.
So what’s eligible?
To make the most of your tax deductions, here’s a quick breakdown of items that you may and may not write off.
Questions about your medical deductions? Reach out to the CPAs at Magone & Company to ensure you’re on track to save.
| Eligible | Not Eligible |
| A physician-directed weight-loss program undertaken to treat obesity | Meal replacements, diet foods and supplements, or a weight-loss program to maintain appearance |
| Treatment at a drug or alcohol clinic, a smoking-cessation program or a prescription for nicotine withdrawal medication | A doctor-recommended trip or vacation to rest or boost your mood |
| Acupuncture | Marriage counseling |
| Dentures, hearing aids and orthopedic shoes | Household help |
| Admission and transportation to a medical conference concerning the chronic illness impacting you or your family member | The collection and storage of DNA (unless you can prove how DNA will be used for diagnostic testing) |
| Childbirth classes for a mother-to-be | Maternity clothes |
| Teeth cleaning and orthodontia | Teeth bleaching |
| A wig that benefits the mental health of patients suffering hair-loss from disease | Hair transplants |
| Contact lenses and peripheral materials | Retin-A for wrinkles |
| Nursing services at home or a care facility | Home nursing services for a normal, healthy baby |
This information is provided for educational purposes and should not be construed as financial or legal advice. Please consult your accountant or attorney for advice specific to your situation.