Costs for medical and dental care continue to rise in the U.S. along with health insurance deductibles, which means greater out-of-pocket expenses for many people. Yet the good news is there is a way to offset these costs by deducting them on your annual tax return. The IRS allows taxpayers to deduct medical and dental expenses on Schedule A of Form 1040 as an itemized deduction, provided they meet certain qualifications.
It is important to note that certain qualifications must be met before a taxpayer can deduct medical and dental expenses.
- First, the taxpayer must be eligible to itemize deductions, meaning that the total itemized deductions must be greater than the standard deduction: $6,300 for single taxpayers and $12,600 for married taxpayers filing a joint return in 2015.
- In addition, expenses must exceed a specific threshold. Taxpayers age 64 and under can only deduct the portion of medical and dental expenses that exceeds 10% of adjusted gross income (AGI). However, if either the taxpayer or their spouse is age 65 or older, the expenses only need to exceed 7.5% of AGI.
What are deductible medical and dental expenses?
Medical and dental expenses include the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the cost for treatments affecting any part or function of the body (IRS Publication 502). This includes payments for services rendered by physicians, surgeons, dentists, and other medical practitioners as well as the cost of equipment, supplies, and diagnostic devices needed for these purposes. In addition, medical and dental expenses include insurance premiums paid for medical and dental insurance.
The following are examples of qualifying medical and dental expenses:
- Ambulance services
- Physical examinations
- Prosthetic limbs
- Medical supplies including bandages
- Chiropractic services
- Contact lenses and eyeglasses
- Dental services provided in a dental office including teeth cleaning, application of sealants, and fluoride treatments, X-rays, fillings, braces, and extractions
- The cost of transportation to receive medical services
- Fertility enhancement procedures
- Hearing aids
- Prescription medication and insulin
- Psychiatric care
- Smoking cessation programs, however, this does not include amounts paid for drugs that do not require a prescription, such as nicotine gum or patches
This is not an all-inclusive list, but it should give you some idea of the type of expenses that are deductible as medical and dental expenses on Schedule A.
Taxpayers should not take a deduction for any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included in your taxable wages on Form W-2. In addition, payments for medication that do not require a prescription are not deductible on Schedule A. The exception to this is for insulin used for the treatment of Diabetes. Any expenses that are reimbursed by your medical or dental insurance should also not be deducted on Schedule A.
The list of expenses that do NOT qualify as medical and dental expenses includes, but is not limited to:
- Controlled substances that are illegal under federal law. This includes marijuana that has been legalized by some states.
- Cosmetic surgery, unless it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease
- Health club dues
- Maternity clothes
- Nutritional supplements
Although thresholds need to be surpassed in order to deduct medical and dental expenses on your tax return, there are many categories of expenses that are overlooked by taxpayers. It may be worth taking some time to review your qualifying expenses. Because if you have enough medical and dental expenses to take a deduction, this will increase your total itemized deductions and lessen your taxable income.
We encourage you to contact one of our tax professionals should you need help determining if you can take a deduction for medical and dental expenses on your tax return.