Medical expenses are a common source of stress for many Americans. Proper health care is costly, and even those with high-quality health insurance may find their medical expenses adding up over time, taking a significant toll on their financial livelihoods.
Are medical bills tax deductible? The answer can potentially help you save. Luckily, the Internal Revenue Service offers tax deductions on some medical and dental expenses, which can provide relief to those struggling to pay any outstanding expenses.
To claim a tax deduction on your medical expenses, you will need to know which expenses the IRS considers deductible, as well as how to file these expenses on your tax returns.
What Medical Expenses Are Deductible?
Generally speaking, medical expenses are the costs associated with diagnosis, treatment, and prevention of diseases. These can include visits to doctors or other healthcare professionals, prescriptions and medications, surgeries and other medical procedures, and any special equipment necessary for these purposes, as well as health insurance premiums.
Any medical expenses you itemize in your tax deduction must have been from the past year – you can’t include any future medical costs. You can claim deductions on unreimbursed medical expenses that you paid for yourself as well as unreimbursed medical expenses that you paid for a spouse or a dependent.
The IRS specifies that deductible medical expenses must combat specific illnesses, rather than merely being generally beneficial – for instance, you couldn’t include the cost of vitamins or a vacation in your deduction.
You can find a full list of qualified medical expenses on the IRS website. However, when asking, “Are medical bills tax deductible?”, generally the answer is “yes” for the following:
- Health insurance premiums
- Prescription drugs
- Insulin
- Dental treatment, including prosthetic teeth
- Hospital stays
- Ambulances
- Surgeries
- Laboratory fees and X-rays
- Long-term care
- Psychology and psychiatry services, including therapy
In addition to these standard medical costs, the IRS allows for the deduction of a wide range of health expenses, some of which might be surprising! These include:
- Alternative medicine, such as acupuncture or massage therapy
- Birth control
- Braille publications
- Breastfeeding equipment, such as pumps
- Capital expenses for medically necessary home renovations
- Chiropractor fees
- Christian Scientist practitioner fees
- Gender reassignment surgery or hormone therapy
- Eyeglasses, contact lenses, and associated materials (such as contact lens solution)
- Hearing aids
- Guide dogs and other service animals – this includes the original cost to purchase the animal as well as costs for training, food, and veterinary care
- Treatment for alcohol or drug addiction
- Smoking-cessation programs
- Special telephone or television equipment for the deaf or hearing impaired
- Weight loss programs prescribed to combat a specific disease
- Wigs for patients with diseases causing hair loss
What Medical Expenses Are Not Deductible?
The IRS does specify several costs that are not deductible. Examples of medical expenses that are not deductible include:
- Most cosmetic surgeries (breast reconstruction surgery after a mastectomy is an exception)
- Non-prescription (over-the-counter) drugs and medications
- Marijuana and other controlled substances that are illegal under federal law – even if they are legal in your state
- Maternity clothes
- Teeth whitening
- Funeral expenses
- Weight loss programs for general health
- Payments to health savings accounts (HSAs)
- Medical costs that were reimbursed to you – for instance, by your insurance or your employer
How Much Of Your Medical Expenses Can You Deduct?
As of 2019, the IRS allows you to deduct any medical expenses that exceed 7.5% of your total adjusted gross income, or AGI.
As of 2019, the IRS allows you to deduct any medical expenses that exceed 7.5% of your total adjusted gross income, or AGI. It’s your taxable income, minus adjustments such as student loan interest and contributions to retirement accounts such as IRAs.
For instance, if you had an adjusted gross income of $50,000, you would need to have spent at least $3,750 on medical bills that year to deduct medical expenses from your taxes. You could claim any costs exceeding that $3,750 on your tax return. So, if you had spent a total of $6,000 on medical expenses that year, your medical expense deduction would be $2,250.
How Can You Claim These Medical Deductions On Your Taxes?
The most important thing to know when considering claiming tax deductions for medical expenses is that you will need to forgo taking the standard tax deduction.
This means that you should be sure that the total cost of your itemized medical deductions is greater than the standard deduction when added to your other deductions. The IRS has an online tool to help you find the cost of your standard deduction.
Once you’ve decided to itemize your medical expenses, you will need to use IRS Schedule A (Form 1040) when filing your taxes. Here is a basic outline of the information you’ll enter on Schedule A:
- Line 1: Enter the total of all your medical expenses
- Line 2: Enter your adjusted gross income, found on Form 1040
- Line 3: Calculate and enter 7.5% of your adjusted gross income
- Line 4: Calculate and enter the difference between your medical expenses (Line 1) and 7.5% of your adjusted gross income (Line 3). This number is the amount that will be deducted from your income tax.
Should You Deduct Your Medical Bills from Your Taxes?
Keeping track of and adding up your medical expenses can be time-consuming! The IRS’s standard tax deduction is substantial enough that most healthy Americans are probably financially better off taking it, rather than going to the trouble of itemizing their medical expenses.
However, if you, a spouse, or a dependent has a health condition requiring special medical care, or if you’ve suffered a serious injury or illness over the past tax year, it may be worth it to tally up those costs and file itemized deductions.
Another factor to consider if you are married is whether you will file separately or with your spouse. If you and your partner file separately, it’s likely that more of your medical expenses will be deductible because you will be comparing your medical expenses against your individual adjusted gross incomes rather than your combined income.
However, filing your taxes separately could mean that you won’t be eligible for other tax breaks available with married filing.
Final Thoughts
Are medical bills tax deductible? In many cases, they are, and you want to take advantage of these deductions. Medical bills can potentially devastate your finances, so you want to take every opportunity to lower their impact on your bank account.
It’s always a good idea to keep a record of your medical expenses, or, at the very least, to save your bills from visits to doctors and other health care professionals. They just might be able to save you some extra money come tax season!