Taking a Tax Deduction on Medical Expenses

Posted by Amanda on February 9, 2014

If you and any of your dependents have had a significant amount of medical expenses over this past tax year, you may be eligible to claim a medical tax deduction.

Medical Expense Threshold

The Medical Expense deduction is not meant to cover typical taxpayer expenditures from visiting a doctor a few times a year, filling one or two prescriptions, etc. In order to claim medical expenses as a deduction, you must prove that your health expenditures for the past year have made a significant dent in your budget. The way that you do this is by meeting a certain threshold of medical expenses in proportion to your income. By law, you may deduct only the amount by which your total medical care expenses for the year exceed 10% of your adjusted gross income for 2013.

Author’s Note: With the healthcare reform law, the threshold amount was raised from 7.5% to 10% for the 2013 tax year:

  • Medical Expense Deduction Threshold for 2012: 7.5%
  • Medical Expense Deduction Threshold for 2013: 10%

What Can and Cannot be Included in the Medical Expense Deduction

According to the IRS, medical care expenses include “payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.” As with any regulation, this definition is not clear cut in what is and is not included.

Here are some examples that are not included in meeting the medical expense deduction:

  • Funeral or burial expenses
  • Over the counter medications
  • Toiletries (toothpaste, cosmetics, etc.)
  • Most cosmetic surgery
  • Nicotine gum/patches that do not require a prescription
  • Maternity Clothes
  • Health Club Dues

Some other rules also apply. For example, you cannot prepay medical services and take the amount as a tax deduction; the medical expenses can only be used towards your itemized deductions once the service has been rendered. Also, any medical expenses paid with pre-tax dollars cannot be claimed towards the itemized deduction (think Flexible Spending Accounts where you already receive a tax benefit). In addition, you cannot use the medical expense deduction if you are claiming the same amount under the Self Employed Health Insurance Deduction. One final rule is that the amount of premium paid by your employer does not count towards the threshold.

Here is a comprehensive list of what can and cannot be included in meeting the threshold to claim the medical tax deduction.



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Comments to Taking a Tax Deduction on Medical Expenses

  1. I believe the medicl expense threshold for 2012 is still 7.5%, not 10%. 10% starts in 2013 tax year. An individual can trip the 10% threshold if they have to pay AMT for 2012 tax year.

    M. Page

    • You are correct, thanks M! It is now updated.

      Madison

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