What Medical Expenses are Deductible?

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What Medical Expenses are Deductible?

RxSaver Editors
By RxSaver Editors
Jan 21, 2021
illustration of a person online filing their taxes

Tax season has arrived, which means it is time to gather receipts and records of deductible expenses, which can include medical bills, receipts for prescriptions, insurance premiums, and more.

The IRS is very specific about what medical expenses are deductible. Be sure to confirm any claimed medical deductions with a tax professional.

Here is what to know about deductible medical expenses.

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Can I claim medical expenses on my taxes?

You may be able to claim some medical expenses on your taxes. For medical expenses to be deductible, they must qualify and they must be unreimbursed. See IRS Publication 502 for a full list of medical and dental expenses that may be eligible for deduction.

There is a specific threshold that you must meet to deduct medical claims. Only those medical expenses that surpass more than 7.5% of your 2020 adjusted gross income may qualify as a deduction. For example, if your adjusted gross income for 2020 is $50,000, only those expenses you paid above $3,750, may be deducted.

What medical expenses are deductible?

Only those medical expenses that you incurred and paid during the previous year are deductible. Some, but not all of the types of medical expenses that may be deductible include:

  • Payments to health care providers
  • Hospital and nursing home care
  • Prescriptions
  • Transportation to and from medical treatment
  • Insurance premiums if paid out of pocket after taxes
  • Medically necessary devices

Payments to Health Care Providers

Payments made during the previous year to health care providers may qualify for a deduction. Health care providers include physicians, surgeons, mental health professionals, dentists, specialists, and other medical providers such as acupuncturists and chiropractors.

Hospital and Nursing Home Care

Hospital bills and bills paid for nursing home care, which exceed 7.5% of your adjusted gross income may be deductible. Hospital bills may include surgeries, admissions, and emergency care.

Prescriptions

Prescription medications, including insulin, may qualify as a medical deduction(s). You will need to have receipts or records of payments to itemize when you file your taxes.

Transportation for Medical Treatment

If you pay someone, such as a taxi driver, or medical transport company to take you to doctor appointments, therapy, dialysis, etc., and have a record of receipts, you may be able to deduct the cost from your tax bill. Likewise, if you use public transportation to get to and from medical appointments, the cost of that transportation may be deductible.

Out of Pocket Insurance Premiums

If your employer does not cover your insurance premium, and you pay for it out of pocket after taxes, you may be able to deduct the expense you incur. You will only be able to deduct your premium if your total medical expenses exceed 7.5% of your adjusted gross income.

Medically Necessary Devices

Medically necessary devices may be deductible on your taxes. These can include prescription eyeglasses, reading eyeglasses, wheelchairs, service animals, crutches, contacts, hearing aids, and dentures. If you are unsure whether a device is deductible, check with your accountant.

What medical expenses are not deductible?

Although many medical expenses may qualify for deductions, other medical expenses are not. These may include:

  • Over-the-counter medications
  • Over-the-counter smoking cessation aids (nicotine gum, patches, etc.)
  • Most plastic or cosmetic surgery
  • Funerals and burials
  • Toiletries, toothpaste, floss, cosmetics

How to File a Claim for a Medical Expense

To file claims for medical expenses, you’ll need to itemize the expenses as opposed to taking the standard deduction. The standard deduction for 2020 for a single person is $12,400, which includes those who are married but filing separately. The standard deduction for those married and filing jointly is $24,800, while the standard deduction for head of household is $18,650.

If the standard deduction is less than your itemized deductions, it may make sense to itemize your medical expenses. However, if the standard deduction is more than your itemized expenses, you may choose to simplify things and take the standard deduction.

Check with a tax professional to determine whether the standard deduction will benefit you more than itemizing your expenses. If you decide to itemize your medical expenses, your tax preparer can help.

Always Check With Your Accountant

To ensure you’re receiving all tax benefits available to you, including qualified medical deductions, seek the guidance of a licensed, professional tax professional. Licensed tax professionals should be consulted, for any questions regarding qualified medical expenses.

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*Nothing herein shall be construed as financial or tax advice. Always confirm medical expense deduction guidance and tax advice from a licensed, qualified tax professional.

RxSaver Editors

RxSaver Editors

RxSaver Editors are wellness enthusiasts who help you learn how you can save the most on prescription medication costs and other health-related topics.

The information on this site is generalized and is not medical advice. It is intended to supplement, not substitute for, the expertise and judgment of your healthcare professional. Always seek the advice of your healthcare professional with any questions you may have regarding a medical condition. Never disregard seeking advice or delay in seeking treatment because of something you have read on our site. RxSaver makes no warranty as to the accuracy, reliability or completeness of this information.

If you are in crisis or you think you may have a medical emergency, call your doctor or 911 immediately.