It’s that time of year again when people are frantically working on tax preparations. On Everyday Health, I just read an incredibly helpful article on deducting medical expenses from your taxes written by Diana Rodriguez & medically reviewed by Lindsey Marcellin, MD, MPH. Her advice is to stay organized, hold on to receipts and follow the rules below…
“Scratching your head trying to figure out some way to justify forking over all that money for braces, glasses, pricey weight-loss programs, corrective eye surgery, and other health care? Before you balk at paying for another medical expense, consider what health care costs you might be able to deduct from your taxes.
What Medical Expenses Are Tax Deductible?
Unfortunately, you can’t deduct every medical expense — for example, that one-time $25 co-payment and that $10 prescription. You also can’t deduct your pre-taxed health insurance premiums. But, you can deduct many medical and dental expenses as long as they total more than 7.5 percent of your adjusted gross income (AGI), says Kena Samuels-Stith, president and CEO of SKS Accounting & Consulting Firm, Inc. in Louisville, Ky. After 2012, this figure is expected to rise to 10 percent of AGI.
For the non-tax savvy, it’s easy to figure out — look at line 38 on your 1040 personal tax return, says Samuels-Stith. If your total medical expenses for you, your spouse, and any of your dependents are greater than the 7.5 percent required minimum amount, there are quite a few health expenses you can deduct from your taxes, including:
- Legal fees related to your health. If you have a lawyer draft a power of attorney or other health care document, you can deduct those fees.
- Removal of lead-based paint. If your child has suffered lead poisoning and you have to pay to have lead-based paint professionally removed from your home, those removal costs are tax deductions.
- Travel expenses. Traveling to and from hospitals, doctors, or conferences to get the best treatment for a particular condition? You can deduct most of those expenses, from conference admission to mileage and transportation to your hotel costs. But you can’t deduct the cost of your meals, says Samuels-Stith.
- Medical procedures. If your health insurance plan doesn’t cover the Lasik surgery or weight-loss program ordered by your physician, you can deduct those health expenses from your taxes.Smoking cessation programs, medications, and aids are also allowable deductions.
- Medical equipment. If you have to buy contact lenses, hearing aids, glasses, orthodontics, dentures, wheelchairs, or crutches, those health expenses are allowable deductions. You can even deduct the cost of a service dog and the costs associated with their care.
- Some medical care. You can deduct the cost of nursing assistance (if you need in-home nursing care or pay for a nursing home), individual health insurance premiums (not those that you pay through your employer), and Medicare Parts B and D premiums.
Medical Expenses: Itemizing Your Deductions
To itemize your deductions, first, make sure that your total deductions are greater than the standard deduction — you don’t want to do all that work and not get as much of a deduction as possible.
Samuels-Stith suggests following the Internal Revenue Service (IRS) guidelines within Form 1040 Schedule A – Itemized Deductions.
Here’s a quick rundown of how you should itemize your deductions:
- Prescription medications
- Health insurance premiums
- Costs from doctors
- Costs from hospitals or clinics
- Costs from diagnostic tests (lab work and X rays)
- Long-term care expenses (nursing homes, etc.)
- Eyeglasses and contact lenses
- Medical supplies and equipment (for example, for diabetic syringes, glucometers, etc.)
- Transportation costs
- Lodging costs
- Miscellaneous medical and dental expenses
In case there’s an audit, says Samuels-Stith, you want to be sure that all of your deductions are itemized in a clear list that supports your tax return information.
Medical Expenses: Hold on to Documents and Receipts
You don’t want to guess the amount of your medical expenses when tax time rolls around — you want to be sure your deductions are accurate. That’s why it’s really important to stay organized all year long and keep documentation of your medical expenses.
“You must keep all supporting documents,” says Samuels-Stith. She recommends purchasing an organizer from an office supply store that has tab inserts. That way you can create tabs to help you organize prescription costs, procedure costs, medical equipment costs, etc.
If you travel to doctor’s appointments often and want to deduct your mileage, keep a travel log. You need to track the destination (including address), mileage, and the date of the visit, and store that in your organizer, says Samuels-Stith.
And always keep your receipts and cancelled checks and make notes on them.
“A good suggestion would be to note on the receipt what and who it is for,” says Samuels-Stith. You’ll also want to note the date that you paid the expense and what it was for- if it was a doctor’s visit (and what it was for), test, or procedure.
For more information on how to deduct medical expenses, check out the IRS website and type in the keyword ‘medical expenses’.”