Medical Expense Deduction

Many of us look at medical expense deduction and see the looming 7.5% AGI limitation.  Although expenses are only deductible over and above that percentage of your AGI, many individuals may have circumstances where they are able to benefit.   As we are approaching another tax deadline, it is good to think about whether it may be worth gathering your medical receipts and adding them up!

The IRS states medical expenses incurred for the diagnosis, cure, mitigation, treatment or prevention of disease and the costs for treatments affecting any part or function of the body can be deducted.  The medical expenses can be for you, your spouse, or your dependent.  One important note to remember is expenses are also deductible for an individual whowould have been your dependent except they had gross income greater than $3,650 or filed a joint return.

Medical insurance premiums, laboratory tests, false teeth, contact lenses, hearing aids, and laser eye surgery are all examples of deductible medical expenses.  Capital expenses for changes made to a home for medical reasons, such as installing a wheelchair ramp, are deductible to the extent they do not increase the value of the home.  Also, do not forget medical mileage and travel expenses when traveling for medical reasons.

Not all expenses you would consider medical qualify, however.  The IRS has strict guidelines regarding what they do not consider deductible.  Over the counter medications and expenses for general health, such as health club memberships, are not deductible.  Weight Watchers meals, or any diet food or beverages are never deductible because they are a substitute for other foods.  The expenses to register at a weight-loss program are deductible only if weight loss is treating a specific disease.

It is a good practice to save all documentation related to medical expenses.  For any treatment costs you plan to deduct, save written documentation from your doctor prescribing treatment along with proof of following the recommendations and receipts of payment.

With the rising cost of medical care each year and lower AGI’s for many, more and more individuals may be able to take advantage of the medical expense deduction.

If you have any questions or would like more information, please contact:

Suzy Marley

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