If you plan to deduct medical expenses, you must itemize deductions using Form 1040, Schedule A. Internal Revenue Service (IRS) tax code defines allowable medical expense deductions as payments made in the diagnosis, cure, mitigation, treatment or prevention of disease. Deductible costs also include purchases for equipment, supplies and diagnostic equipment used for medical care. Medical care deductions cover medical and dental expenses for you, your spouse and your dependents.
For the 2012 tax year, your deduction for medical expense is limited to the amount paid out that is over 7.5 percent of your adjusted gross income (AGI). For example, your AGI for 2012 is $50,000; 7.5 percent of your AGI equals $3,750; your medical expenses total $4,225; by subtracting $3,750 from $4,225, you arrive at a medical tax deduction of $475.
Deductible Medical Expenses
Medical expenses eligible for deduction include, but are not limited to, invoices paid to your doctor, dentist, chiropractor, psychiatrist, psychologists, surgeons and Christian Science practitioners for medical care; payments for hospital or long-term care; payments made for acupuncture therapy or smoking-cessation classes; prescription drugs, except for insulin, which does not require a prescription and qualifies as deductible; some transportation costs; false teeth; prescription glasses or contacts; hearing aids and guide dogs for those who are blind or deaf. Expenses also include insurance premiums that you paid for medical care, and certain qualified, long-term care insurance, as determined by your individual situation.
Non-Deductible Medical Expenses
Medically related expenses that pass the lawful test in state statutes but fail at the federal level, such as medical marijuana, are not deductible. Other nondeductible expenses include cosmetic surgery; health club dues; payments made into health savings or medical savings accounts; fees associated with whitening teeth; nonprescription drugs and medicines; nutritional supplements; medicines or drugs purchased outside the United States; and veterinary fees, among others.
In most cases a taxpayer itemizes deductions to lower his tax obligation. Therefore, make sure the total deductions you can legally claim exceed the standard deduction for your filing status. If not, choose the standard deduction if IRS rules do not limit its use. For 2012, the standard deduction for single taxpayers is $5,950; for married filing jointly, $11,900; for married filing separately, $5,950; for head of household, $8,700; and for a qualifying widow(er), $11,900.
Tax laws change at the whim of Congress and the administration. Keep that in mind when preparing your yearly federal tax returns. If in doubt as to the accuracy of your return or unsure of current tax law, whether state, local or federal, seek reliable assistance in the form of a tax professional.
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- Internal Revenue Service: 2011 Instructions for Schedule A (Form 1040); Itemized Deductions
- Internal Revenue Service: Publication 502 Medical and Dental Expenses
- Internal Revenue Service: Topic 502 – Medical and Dental Expenses; December 2012
- Internal Revenue Service: Topic 501 – Should I Itemize?; December 2012
- Internal Revenue Service: Six Facts about Choosing the Standard or Itemized Deductions; March 2011
- tax forms image by Chad McDermott from Fotolia.com