The medical expense tax deduction is a provision in the tax code that allows individuals to deduct certain unreimbursed medical expenses from their taxable income. This deduction is available for qualifying medical expenses that exceed a certain percentage of the taxpayer’s adjusted gross income (AGI).
You can deduct unreimbursed medical expenses that exceed 7.5% of your AGI. This means that if your AGI is $50,000, you can deduct medical expenses that exceed $3,750 (7.5% of $50,000).
Qualifying medical expenses typically include costs related to the diagnosis, cure, mitigation, treatment, or prevention of disease, as well as expenses for treatments affecting any part or function of the body. This can include doctor’s visits, prescription medications, medical supplies, dental treatments, vision care, and certain long-term care services.
For residents of continuing care retirement communities, the medical expense deduction may be used on a portion of the entry fee (in year one) and the ongoing monthly fees. This is because these fees may be applied toward future medical expenses. Therefore, this portion is considered a “prepaid medical expense,” and can be included as part of your annual medical expenses.
It is important, however, to note that not all medical expenses are deductible. For example, expenses that are reimbursed by insurance or paid for with funds from a Health Savings Account (HSA) or Flexible Spending Account (FSA) are generally not eligible for the deduction.
Always keep detailed records and receipts for all medical expenses you wish to deduct, as you will need to provide documentation if your tax return is audited.
Additionally, tax laws can change, so it’s a good idea to consult with a tax professional or refer to the IRS website for the most up-to-date information on medical expense deductions.