If you itemize your taxes rather than taking the standard deduction, you can itemize your healthcare expenses for a tax deduction. However, the threshold is high.
Prior to January 1, 2019, you can only deduct those healthcare expenses that exceed 7.5% of your adjusted gross income (AGI – line 37 on Form 1040). Starting in 2019, however, it will go up to 10%. So if your AGI is $100,000 and your healthcare expenses are $11,000, you will have to itemize all $11,000 but only be able to deduct $1,000.
Fortunately, there are more deductible items than most people realize. Some may be surprising. There are also more people for whom you can claim deductions.
Whose expenses can I deduct from my taxes?
- You and your spouse
- Anyone you claim on your tax return
- A dependent who dies during the year and is thus not claimed at the end of the year
- Any child you pay healthcare expenses for, even if not listed on your return
- A parent if you supply more than 50% of his or her support
What kinds of expenses can I deduct?
- Premiums paid with post-tax dollars
- Premiums paid by self-employed persons who buy their insurance in their own name or in the company’s name (deducted on 1040, not in business expenses)
- Deductibles, copayments, and out-of-pocket expenses for doctors, dentists, psychiatrists, and non-traditional medicinal personnel
- Prescription drugs
- Approved alcohol, drug-abuse, and smoking treatment programs
- Travel costs to and from doctors and treatment centers
- Costs for service animals
- Medically necessary home improvements
- Admission and travel to a medical conference for a chronic illness suffered by you or anyone claimed on your taxes
- Long-term care insurance premiums on qualified policies
- Medical care provided in a nursing home, or the entire nursing home stay if the reason for the stay is specifically for medical care
- Wigs for a cancer patient
- Medical/educational support for a handicapped child – ex. remedial reading for dyslexic child, companion for blind child
What kinds of expenses can I not deduct?
- Premiums paid with pre-tax dollars
- Weight loss treatments not specifically prescribed for certain diseases
- Health expenses for which you were reimbursed
- Non-prescription drugs (except insulin)
- Hair transplants, elective breast reduction or enhancement, nose jobs, and other elective surgeries, even if they have a therapeutic benefit
These lists are not exhaustive. It’s best to consult with an experienced tax accountant to be sure you’re taking all the deductions available to you and not including anything you shouldn’t. Contact us so that we can discuss how we might be able to help you sort through this sometimes confusing issue.