Article Highlights:
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Adjusted Gross Income (AGI) limitation
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Itemized Deductions
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List of Over 60 Medical Issues and Their Deductibility
In today's environment, when medical expenditures are skyrocketing, understanding the complexities of tax-deductible medical expenses is not only advantageous—it is required for smart financial planning. This tutorial delves into the intricacies of deductible medical expenses, including crucial features such as the 7.5% of Adjusted Gross Income (AGI) limit, and takes a detailed look at the numerous expenditures that qualify as qualified medical expenses.
The Internal Revenue Code allows taxpayers to claim certain unreimbursed medical and dental expenditures as itemized deductions on Schedule A of Form 1040. To be eligible, these expenses must exceed 7.5% of your adjusted gross income (AGI).
The 7.5% of AGI limitation is a cutoff point below which medical expenses are not deductible. Only medical expenses that exceed 7.5% of your adjusted gross income can be deducted. For example, if your AGI is $50,000, you can only deduct medical expenses that exceed $3,750 ($50,000 multiplied by 7.5%). Another constraint on deducting medical expenditures is that you must itemize your deductions, which usually occurs when your standard deduction is less than the sum of permitted deductions.
Only out-of-pocket medical expenses are tax deductible. For example, if you have a $2,000 root canal surgery and your health insurance pays $1,700 of the cost while you pay $300, only the $300 payment qualifies for a medical deduction. If your policy covered the whole $2,000, your medical tax bill would be zero.
Medical expenses are defined by tax law as the costs of diagnosing, curing, mitigating, treating, or preventing disease, as well as treatments affecting any portion or function of the body, including dental charges.
The following is a thorough list of specific medical costs that are deductible and which are not. Each item is described to provide clarity and support for your tax planning.
1. Abortion: The cost of a legal abortion is considered a medical expense.
2. Acupuncture and Chiropractic Care: Chiropractors' fees for treatments are deductible. Such care frequently includes spinal manipulations designed to improve physiological function.
3. Adoption Expenses Paid by Adopting Parent- Medical expenses paid by an adopting parent for medical services supplied to a child, even before the child was put in the parent's household, are deductible if:
- The child is considered a dependency of the adoptive parent when services are provided or paid for.
The parent or agent pays for the child's medical bills.
The adoption agency does not repay fees incurred prior to discussions.
The expenses are proven to be directly related to the child's medical care.
Adoptive parents cannot deduct the natural mother's delivery expenses.
4. Alcoholism and Drug Addiction Treatments: Treatment in therapeutic centers for alcoholism and drug addiction is tax deductible. This includes the expense of food and lodging when they are required for treatment.
5. Auto Travel- When driving a car for medical reasons, a deduction is allowed at a set rate per mile (21 cents in 2025) or for the real cost of gas and oil (excluding repairs, maintenance, depreciation, lease costs, and so on).
6. Birth Control Pills- A taxpayer can claim the cost of birth control pills as medical expenses if they were recommended by a doctor.
7. Body Scan: The cost of a full-body scan was allowable even though the taxpayer who underwent the test had no signs of illness and had not gotten a physician's recommendation prior to the treatment. This technique was for diagnosis, and because it had no non-medical purpose, the IRS approved it, despite its high cost and the possibility of less expensive alternatives.
8. Christian Science Practitioners: Payments to approved practitioners for healing sessions are eligible, demonstrating the IRS's recognition of varied medical methods.
9. Condoms, Vasectomy: Expenses for purchasing condoms are considered preventative care and hence deductible. A vasectomy is an allowable medical expense.
10. Contact Lenses: Costs for contact lenses and maintenance supplies such as saline solution are covered, emphasizing the importance of corrective vision care.
11. Cosmetic surgery is defined as any technique that aims to improve the patient's look but does not significantly increase the proper function of the body or prevent or treat illness or disease. Cosmetic surgery or other similar procedures cannot be deducted as medical expenses unless the surgery or procedure is required to correct a deformity caused by (or directly related to) (1) a congenital abnormality, (2) a personal injury from an accident or trauma, or (3) disfiguring disease. The IRS specifically determined that breast reconstruction surgery paid for by a breast cancer patient who underwent a mastectomy as part of her cancer treatment constituted a deductible medical expense.
12. Crutches, Canes, and Walkers: Purchasing or renting walking aids qualifies since they help with mobility during injury recovery.
13. Decedent's Medical Expenses - Medical expenses incurred before to death are claimed as an itemized deduction on the decedent's final individual return. Medical expenses incurred after the decedent's death become the estate's burden and must be declared on the estate tax return, if one is required to be filed. Expenses received from estate funds within one year of the date of death, on the other hand, can be considered as if paid by the decedent and claimed on the decedent's final return. Consult the estate executor.
14. Direct Primary Care Arrangements - The charges of direct primary care arrangements (sometimes known as a "concierge doctor") are considered medical expenses and are deductible.
15. Disabled Dependent Care Expenses - Some disabled dependent care expenses may be classified as either medical or work-related expenses for the purpose of claiming a credit for child and dependent care. The expenses can be applied either way, as long as they are not used to claim both a credit and a medical expense deduction.
16. Dental Treatment: Dental operations such as cleanings, fillings, braces, and extractions are eligible for deduction.
17. Diagnostic Devices: The cost of diagnostic devices, such as blood sugar test kits for diabetics, is deductible.
18. Diapers:To claim the cost of adult diapers, a doctor's prescription may be required.
19. Disabled Dependent Care : expenditures for caring for a disabled dependent may be eligible if they are not previously claimed as work-related expenditures.
20. Drug Addiction Treatment: Inpatient treatment costs, including meals and lodging at therapeutic facilities, are deductible, reflecting the multifaceted nature of addiction rehabilitation.
21. Egg Donor Expenses:The IRS has secretly concluded that a woman who is unable to produce children using her own eggs may claim a medical expenditure deduction for the costs of finding an egg donor, including any associated legal fees.
22. Equipment and Supplies - The IRS has concluded that the prohibition on deducting nonprescription medicine or pharmaceuticals does not apply to crutches, bandages, and diagnostic gadgets (for example, diabetic blood sugar assays). The expenditures of such equipment and supplies are deductible if they are paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, as required.
23. Eye Care: Deductible expenses include eye exams, eyeglasses, and operations such as laser interventions to correct vision problems. However, the acquisition of a magnifying lens
24. Fertility Enhancement: Treatment costs for overcoming infertility, such as in vitro fertilization, including temporary egg or sperm preservation, can be subtracted.
25. Gender Identity Treatment : According to a decision by the United States Tax Court, the cost of surgery and treatments for gender identity disorder are deductible.
26. Genetic Diagnosis Testing: The term "diagnosis" refers to the determination of whether or not a disease is present, as well as the testing of changes in body function that are unrelated to the disease. A Revenue Ruling allows amounts paid by individuals for diagnostic and similar procedures performed without a physician's recommendation and on an individual who does not have symptoms of an illness or disease, as well as a pregnancy test that tests the body's healthy functioning, to be classified as medical care. However, the IRS has privately stated that the taxpayer must divide the cost of a DNA collection kit and health services into medical and non-medical items and services in order to establish what is deductible medical care.
27. Guide Dogs and Service Animals: The expenses associated with purchasing, training, and maintaining a service animal for a disabled person are deductible. This does not apply to emotional support animals.
28. Hearing Aids: Costs include the purchase, maintenance, and repair of hearing aids.
29. Health Club Dues: Health club membership fees or sums paid to promote your overall health or relieve physical or mental distress unrelated to a specific medical condition are not eligible as medical expenses.
30. Health Reimbursement Arrangements (HRA) Payments - Because an HRA is a pre-tax plan funded by an employer, medical expenses paid via it are not tax deductible.
31. Health Savings Account (HSA) Payments : Contributions to an HSA cannot be deducted as a medical expense. Furthermore, medical expenses paid for with tax-free HSA payouts do not qualify for medical expense deductions.
32. Home Modifications for Medical Reasons : Home modifications for disabled people, such as widening doors or constructing ramps, can be deducted as medical expenses, and the cost savings are reflected into property values.
33. Household Help as a Medical Expense - Even if a doctor recommends household help, the cost cannot be deducted from medical expenses. This is considered a personal expense and therefore not deductible.
34. Insurance premiums - Allowable insurance payments include medical, hospital, dental, long-term care (limited), lost or damaged contact lenses, prescription medications and insulin, as well as Medicare-B and Medicare-D insurance premiums (see Medicare premiums). Premiums paid through an employer's flexible spending plan are not deductible because they are made using pre-tax funds. The deduction for insurance premiums purchased through a health exchange (Marketplace) is allowed net of the premium assistance credit.
If you are a self-employed individual, partner, or more than 2% shareholder of a S corporation, you may be able to deduct 100% of the amount paid for medical insurance on behalf of yourself, spouse, dependents, and children under age 27, even if the child is not a dependent. Check with this office for more information on the requirements for claiming this deduction.
35. Lab Fees, X-rays: Medical expenses include laboratory fees and X-ray costs associated with medical care.
36. Lactation - According to the IRS, breast pumps and lactation equipment are considered medical care.
37. Lead-Based Paint Removal- The cost of removing lead-based paints from surfaces in a taxpayer's house to keep a kid who has or has had lead poisoning from eating the paint can be included in medical costs. These surfaces must be in bad condition (peeling or cracking) and within the child's grasp. The cost of repainting the scraped area is not considered medical expenses.
38. Learning difficulties Special Education:
If a doctor advises a special school for youngsters with severe learning difficulties, the tuition is deductible. Tutoring expenses from competent teachers are also deductible if they are directed toward addressing the student's unique learning issues.
39. Legal Expenses: Legal expenses may be deducted as medical expenses if they are directly or indirectly related to the provision of medical care to a taxpayer.
40. housing - The cost of meals and housing at a hospital or comparable institution may be included if the primary reason for being there is to obtain medical care. Medical expenses may also include the cost of lodging not supplied by a hospital or comparable facility. The cost of such lodging while away from home may be included if the lodging is primarily for and essential to medical care provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital, the lodging is not lavish or extravagant under the circumstances, and the travel away from home does not include any significant element of personal pleasure, recreation, or vacation.
The amount covered in medical expenses for housing cannot exceed $50 per night for each individual. Lodging is included for a person whose transportation expenses are considered medical because they are accompanying the individual receiving medical care. For example, if a parent travels with a sick child, up to $100 per night is covered as a medical charge for housing. Meals are not deductible.
41. Long-Term Care Insurance – Long-term care services and some long-term care insurance premiums will be considered medical expenses on Schedule A, subject to specified yearly inflation adjustments.
42 . Meals - Medical costs may include the whole cost of meals at a hospital or similar institution if the primary reason for being there is to receive medical care. Meals that are not part of inpatient care may not be covered.
43. Medical Alert Devices : The cost of medical alert devices that the elderly or infirm can wear to summon medical assistance if they fall or have another medical emergency may be deductible. These devices must fit the definition of a medical cost. In some circumstances, to fit the criteria of a medical device, the gadget must be recommended by a medical expert.
44. Medical Conferences: The costs of attending medical conferences relating to a dependent's medical condition, except meals and lodging, are deductible.
45. Medical Insurance costs : Medical insurance costs, including Medicare B and D and other health plans, are deductible. Coverage obtained through a health exchange is deductible, excluding any premium assistance credits.
46. Medication: Only prescribed medications and insulin are permitted.
47. Mental Health Support : Fees for psychiatrists, psychologists, and other mental health experts are eligible, reflecting a comprehensive view of health.
48. Moving If a taxpayer is obliged to relocate permanently for medical reasons, only transportation costs for the taxpayer are deducted; travel costs for the taxpayer's family are not deductible. Other common moving expenses, such as a van and storage, are not deductible.
49. Nursing Services: While certified nurses are not required to provide these services, the primary goal must be medical care in order to qualify.
50. Organ Donor Expenses: For example, a kidney recipient who pays for a kidney donor's surgery, hospitalization, and transportation can deduct these expenditures as medical expenses.
51 .Physical Exam - The amount a taxpayer pays for an annual physical exam is allowable, even if the taxpayer has no indications of sickness.
52. Personal Protective Equipment (PPE) -According to the IRS, sums paid for personal protective equipment, such as masks, hand sanitizer, and sanitizing wipes, for the primary purpose of limiting the spread of the coronavirus, are considered as medical care expenses.
53. Pregnancy Test - The cost of a self-administered pregnancy test was deductible, despite the fact that its goal was to assess the body's healthy functioning rather than to diagnose disease.
54. Schools and Education, Special - A taxpayer may include payments to a special school for a mentally impaired or physically disabled person in medical costs if the primary reason for attending the school is to benefit from its resources for disability relief. A taxpayer may include, for instance, the expense of:
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Teaching Braille to visually impaired children.
Teaching lip reading to a hearing-impaired child. - Providing remedial language training to address a congenital disability.
The cost of meals, accommodation, and ordinary education provided by a special school can be included in medical expenses only if the primary reason for the child's attendance is to benefit from the school's resources to alleviate the mental or physical handicap.
Do not include the cost of sending a problem child to a special school in your medical expenses because the youngster may benefit from the course of study and disciplinary measures.
55. Smoking-Cessation Programs - The Internal Revenue Service has concluded that uncompensated payments paid by taxpayers for participation in smoking-cessation programs and prescribed medications meant to treat nicotine withdrawal are acceptable medical expenses. There are no deductions for nonprescription nicotine chew or certain nicotine patches.
56. Spouse - former or Current - A taxpayer may include medical costs paid for a former or current spouse if the taxpayer was married to the spouse either at:
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When the spouse received medical care or
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At the time, the taxpayer covered the medical costs.
- 57. Stem Cell Therapy and Storage -The use of stem cell therapy to treat a disease that fulfills the tax definition stated at the beginning of this article would qualify as a medical deduction. Cord blood includes stem cells, which doctors can employ to heal diseases. Thus, charges for banking cord blood to treat an existing or imminently foreseeable disease may be considered deductible medical expenses. However, banking cord blood as a precaution to treat a sickness that may arise in the future does not meet the current legal threshold, which requires that a condition be at least imminently possible.
58. Sterilization - The cost of legal sterilization (a lawfully performed operation that prevents a person from having children) may be included in medical expenses. - 59. Surgery: Expenses for non-cosmetic and reconstructive surgeries or operations are deductible if they treat a medical condition or result from an accident or trauma.
60. Surrogate Mother: A surrogate mother is neither the taxpayer nor the taxpayer's husband, and she is usually not a dependent. Unborn children are likewise not dependents. Thus, medical expenses for a surrogate mother and her unborn child are not eligible for a medical deduction.
61. Telephone - Medical expenditures include the cost of special telephone equipment that allows a person who is deaf, hard of hearing, or has a speech disability to communicate using a standard telephone. This comprises teletypewriter (TTY) and telecommunications device for the deaf (TDD) equipment, as well as repairs to the equipment. Also Specialized phones with large buttons or graphics instead of digits are available without a prescription. - 62. Television - Medical expenses include the cost of equipment that displays the audio portion of television programs as subtitles for those with hearing impairments. This could be the cost of an adaptor that connects to a standard set. It could also refer to a portion of the cost of a specifically equipped television that is higher than the cost of the same model conventional television.
63. Transportation: Amounts paid for ambulance service, as well as bus, taxi, rail, or aircraft fees, are allowable as medical expenses. - 64. Tuition Medical - A lump-sum price that includes education, board, and medical care but does not specify which portion of the fee is for medical care is not deemed a medical care payment and hence is not deductible. However, charges for a health plan contained in a lump-sum tuition price are eligible provided they are individually declared or easily accessible from the school.
65. Vehicles & Vehicle Modification - Medical expenses include the cost of installing special hand controls and other specific equipment in an automobile for a disabled person to operate. Medical expenses can include the difference in cost between a standard car and one expressly equipped to accommodate a wheelchair. - 66. Weight-Loss Programs: Medically prescribed weight-loss therapies designed to reduce obesity-related health problems are deductible.
67. Wig - A taxpayer may include in medical costs the cost of a wig obtained on the advise of a physician for the mental health of a patient who has lost all of his or her hair due to sickness. - Maximising your medical deductions necessitates strategic recordkeeping. Keep detailed records of all medical transactions, such as receipts, invoices, insurance payments and reimbursements, and doctor's treatment recommendations. This approach not only helps with tax filings but also provides a clear financial picture of your medical expenses.
- Navigating the maze of medical deductions can be difficult, but the financial benefits are enormous. Understanding and effectively arranging your medical expenses allows you to dramatically reduce your taxable income, providing relief and improved financial health. Always contact with a tax advisor to verify you are taking advantage of all available opportunities and following the most recent IRS requirements.
Please contact this office if you have any queries or need assistance.
