February 16, 2023
Medical expenses add up quickly. If you, your spouse, or your dependents have had costly medical bills, hang on to those receipts—they could save you money at tax time.
If you itemize your deductions at tax time instead of claiming the standard deduction, you can deduct various healthcare and medical expenses. But you can’t take them all—as of tax year 2022, you can deduct out-of-pocket expenses that total more than 7.5% of your adjusted gross income (AGI).1
KEY TAKEAWAYS
- If you incurred substantial medical expenses not covered by insurance, you might be able to claim them as deductions on your tax return.
- These costs include health insurance premiums, hospital stays, doctor appointments, and prescriptions.
- Other eligible costs that are frequently overlooked include alternative treatments like acupuncture, well-child care for newborns, hotel stays for medical visits, and special diets.
- The deduction for tax year 2022 covers expenses that exceed 7.5% of your adjusted gross income (AGI).1
Tax law defines medical expenses as costs for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body.1
This definition covers costs for health insurance premiums (if they aren’t deducted in pretax dollars from your paycheck), doctors, dentists, hospital stays, diagnostic testing, prescription drugs, and medical equipment. But the Internal Revenue Service (IRS) also allows for a wide range of cost
Medical and Dental Expenses
You can deduct unreimbursed, qualified medical and dental expenses that exceed 7.5% of your AGI.1 Say you have an AGI of $50,000, and your family has $10,000 in medical bills for the tax year. You could deduct any expenses over $3,750 ($50,000 × 7.5%), or $6,250 in this example ($10,000 – $3,750).
The medical expenses don’t have to be your own: You can also deduct expenses that you paid for your spouse or your dependents, including a qualifying child or a qualifying relative.2
Remember that you have to itemize on Schedule A Form 1040 or 1040-SR to deduct medical and dental expenses—which means that you can’t take the standard deduction. For itemizing to make financial sense, your medical expenses (and other itemized deductions) should be greater than the standard deduction. Here’s a look at the standard deductions for 2022 and 2023:
Easily Overlooked Medical and Dental Expenses
Some deductible medical and dental expenses are more obvious than others. For example, doctor visits, hospital stays, and diagnostic tests (e.g., X-rays) count as qualified expenses. However, some deductible expenses are easy to miss. Here are 20 medical expenses to keep in mind if you’re itemizing your family’s medical bills (check out IRS Publication 502 for a complete list).1
1. Alternative treatments
Acupuncture is definitely deductible. So are trips to the chiropractor and nontraditional medical practitioners, including Christian Science practitioners. Other alternative treatments may be deductible, too, especially if a doctor orders them.1
2. Adaptive equipment
The costs of wheelchairs, bath chairs, bedside commodes, and other items needed for a disability or condition are deductible. So are special hand controls and other special equipment installed in cars for people with disabilities. Likewise, you can deduct the amount that you pay for an artificial limb (i.e., a prosthetic device) or artificial teeth. People who are deaf, hard of hearing, or have a speech disability can deduct the cost of special telephone equipment, such as teletypewriter (TTY) and telecommunications device for the deaf (TDD) equipment.2
3. Costs for newborns
No, we don’t mean diapers or babysitters. But breast pumps and other nursing supplies that assist lactation are deductible.5 If your baby formula requires a prescription, the cost in excess of the cost of the regular formula may be allowed.
4. Diabetes-related costs
Blood-testing kits, including blood strips and batteries, are deductible. So is insulin, even though it is not technically viewed as a prescription drug.1,2
5. Eye- and ear-related conditions
The cost of eye exams, contact lenses, lens solution and cleaner, and prescription eyeglasses (including sunglasses) is deductible, assuming your insurance doesn’t have a vision plan. So is eye surgery such as LASIK and radial keratotomy to treat vision problems. Braille books are also deductible. Those with hearing issues can deduct the costs of exams and hearing aids (including batteries). You can also deduct the cost of programs that teach Braille or lip reading or give language training to correct a condition caused by a congenital disability.2
6. Home improvements (aka ‘capital expenses’)
If you install permanent features or renovate your home to accommodate a disability, the cost may be fully deductible.2 Examples include constructing ramps, widening doorways, lowering or modifying kitchen cabinets, and adding support bars. However, the expense is deductible only for costs above any increase made to the home’s value.
For example, putting in a swimming pool or steam room that costs $25,000 isn’t deductible if it adds $30,000 to your home’s value. If the improvement doesn’t increase the value of your home, then the entire cost can be included as a medical expense.
IMPORTANT:
Only reasonable costs to accommodate a home for a person with a disability are considered medical care. Additional costs for personal motives—such as architectural or aesthetic purposes—don’t count as medical expenses and can’t be deducted.2
7. Lodging to receive medical treatment
You can deduct the cost of meals and lodging at a hospital or similar institution if you’re there to receive medical care.2 In other settings, you can deduct the cost of lodging while away from home if you meet all of the following requirements:
- The lodging is primarily for and essential to medical care
- The medical care is provided by a doctor in a licensed medical care facility
- The lodging isn’t lavish or extravagant under the circumstances
- The stay isn’t for personal pleasure, recreation, or vacation2
The most you can deduct for lodging is $50 per night for each person (you can include lodging for someone traveling with the person receiving the medical care). For example, if a parent travels with a sick child, the family could deduct up to $100 per night for lodging. However, meals are not included.2
8. Attending medical conferences
You can deduct the cost of admission and transportation to a medical conference if the event is related to your, your spouse’s, or your dependent’s chronic illness.1 Most of the time that you spend at the conference must be for attending sessions on medical information. Note that meals and lodging expenses are not deductible.
9. Organ transplants
Medical expenses for the care you received as a donor or a possible donor of a kidney or other organ are deductible. Similarly, you can include any expenses that you pay for the medical care of a donor in connection with the donation of an organ to you, your spouse, or your dependent. Transportation costs related to the transplant are included.2
10. Home care
For someone unable to manage activities of daily living (ADL), the cost of a personal attendant is deductible. Generally, the deductible portion is limited to personal assistance with daily routines. It does not include the cost of housecleaning and other chores—although this may be hard to separate, realistically speaking. You can also include the cost of the caregiver’s meals and additional amounts that you paid for related household upkeep, such as extra utilities or rent (e.g., for a larger apartment to provide space for the person).2
11. Substance use disorder treatment
The cost of inpatient treatment programs for people with substance use disorders is deductible. This includes the cost of meals and lodging that the facility provides during treatment. You also may be able to include the cost of transportation to and from support organization meetings (e.g., Alcoholics Anonymous) in your community.2
12. Reproductive health
You can deduct the cost of birth control pills, pregnancy test kits, legal abortions, vasectomies, and fertility treatments, including in vitro fertilization, lab fees, and the temporary storage of eggs or sperm. You can also deduct surgery costs for reversing a prior procedure to prevent pregnancy.2
13. Service animals
You can deduct the cost of buying, training, and maintaining a guide dog or other service animal that helps someone who is deaf or hard of hearing, visually impaired, or someone with other physical disabilities. This generally includes any amounts that you pay to maintain the health and vitality of the service animal—such as food, grooming, and veterinary care—so it can perform its duties.2
14. Dental treatment
The costs that you incur to prevent or alleviate dental disease are deductible. This includes payments to dental hygienists and dentists for teeth cleaning, sealants, fluoride treatments, X-rays, fillings, braces, extractions, dentures, and other dental ailments. Teeth whitening is specifically excluded.2
15. Smoking cessation programs
If you are trying to quit smoking, you can deduct the amounts that you pay for smoking cessation programs and other doctor-prescribed treatments. However, you can’t deduct nonprescription drugs, like nicotine gum and patches, designed to help you quit smoking.2
16. Condition-specific foods
If you have a medical condition such as celiac disease, obesity, or hypertension, you may be able to deduct the cost of special food. The food must not satisfy your regular nutritional needs and must alleviate or treat the illness. The need for the special food must be substantiated by a physician. Only the cost that exceeds the cost of regular foods is deductible.6
17. Children with learning disabilities
Fees that you pay for tutoring to help a child with learning disabilities are deductible. The tutoring must be recommended by a doctor and conducted by a teacher who is trained and qualified to work with children with learning disabilities caused by mental or physical impairments (including nervous system disorders). You can include the cost (tuition, meals, and lodging) of attending a school that offers programs to help children with learning disabilities.7
18. Travel to doctors, pharmacies, and therapy sessions
You can deduct the cost of bus, taxi, train, plane tickets, and ambulance transportation. If you use your vehicle, you can use the IRS-set mileage rate and include your out-of-pocket expenses, such as the cost of gas and oil. In 2022, the mileage rate is 18 cents through 1/1-6/30 and 22 cents through 7/1-12/31.8 These are much lower than the allowable rates for business use of a vehicle.)
19. Weight loss programs
If a doctor can confirm that your current weight is a threat to your health, any prescribed weight loss program is deductible. However, programs for maintaining general good health are not deductible. For example, you can’t include membership dues for gyms, health clubs, or spas—but you can include separate fees charged by those facilities for weight loss activities.2
20. Wigs for cancer patients
People with hair loss due to a medical condition like alopecia or cancer treatments like chemotherapy can deduct the cost of a wig. The wig must be purchased on the advice of a physician for the patient’s mental health.2
Are Medical Expenses Tax Deductible?
Yes. The Internal Revenue Service (IRS) allows you to deduct certain unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI). To claim the deduction, you must itemize when filing your income tax return.1
Which Medical Expenses Are Not Deductible?
You can only deduct unreimbursed medical expenses. So, if your insurance covered the expense or your employer reimbursed you for it, then you can’t take the deduction. Additionally, the IRS generally disallows the deduction for most cosmetic procedures, nonprescription drugs (except insulin), nonprescription nicotine gum and patches, general toiletries (e.g., toothpaste and cosmetics), trips and programs to improve your general health, and funeral and burial expenses.2,1
How Do I Claim the Medical Expense Deduction?
You must itemize your deductions on Schedule A Form 1040 or 1040-SR when filing your federal income tax return. Keep in mind that if you itemize your deductions, you won’t be able to take the standard deduction.9 Run the numbers both ways—itemizing vs. taking the standard deduction—to ensure that you receive the most favorable outcome on your taxes.
How Much Can I Deduct for Medical Expenses?
The IRS lets you deduct 100% of your unreimbursed, qualified medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI). So, for example, if your AGI is $50,000, you could deduct expenses that exceed $3,750 ($50,000 × 7.5%). If you had $8,000 in qualified expenses in this example, you would be able to deduct $4,250 ($8,000 – $3,750). Remember that you must itemize your deductions on Schedule A Form 1040 or 1040-SR to take the deduction.1
The Bottom Line
It’s worth tallying up your health-related expenses that are not covered by insurance or other reimbursement methods to see if you meet the percentage-of-AGI threshold. That 7.5% threshold, which was set by the Tax Cuts and Jobs Act of 2017, was made permanent at the end of 2020 and will not likely rise back to 10% anytime soon.
This article was originally published in Investopedia on February 16, 2023, and written by Barbara Welman.
2. Image courtesy of iStock
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Article Sources
1. Internal Revenue Service. “Topic No. 502 Medical and Dental Expenses.”
2. Internal Revenue Service. “Publication 502 (2021), Medical and Dental Expenses.”
3. Internal Revenue Service. “IRS Provides Tax Inflation Adjustments for Tax Year 2023.”
4. Internal Revenue Service. “IRS Provides Tax Inflation Adjustments for Tax Year 2022.”
5. Internal Revenue Service. “Lactation Expenses as Medical Expenses,” Page 1.
6. Internal Revenue Service. “Part I Section 213—Medical, Dental, etc., Expenses,” Page 1.
7. Internal Revenue Service. “Publication 970 (2021), Tax Benefits for Education.”
8. Internal Revenue Service. “IRS Increases Mileage Rate for Remainder of 2022.”
9. Internal Revenue Service. “Topic No. 551 Standard Deduction.”
10. Congressional Research Service. “Temporary Individual Tax Provisions (“Tax Extenders”),” Page 1.
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