If you spent a lot of money on medical costs last year, you might be able to write some of them off. But your medical bills have to exceed a high threshold before they count as deductions.
- The IRS lets you deduct medical costs on your tax return as long as they are more than 10 percent of your adjusted gross income. And only costs that exceed that amount can be deducted.
- Taxpayers who are 65 or older can still use the previous 7.5 percent threshold to claim itemized medical expensesfrom the 2016 tax year, though the 10 percent hurdle applies going forward.
The percentage may seem unattainable at first glance, but with a little tax triage you might just meet it.
Whose medical deductions can you count?
Medical and dental bills for you, your spouse and your dependents — everyone listed on your tax return — count toward the allowable deduction limit. You might be able to count some medical expenses you paid for your parents, even if they aren’t considered your dependents for exemption purposes.
And while it’s not something we want to think about, don’t forget about medical bills you paid for a deceased dependent in the year they were paid, whether before or after the person died.
Once you’re confident you know just whose costs are covered, make sure you don’t miss any.
Often-overlooked medical deductions:
- Travel expenses to and from medical treatments. The IRS evaluates the standard cents-per-mile allowance each year. For 2016 taxes, the medical travel rate is 19 cents per mile. For 2017, the rate is 17 cents per mile.
- Insurance payments from already-taxed income. This includes the cost of long-term care insurance, up to certain limits based on your age.
- Uninsured medical treatments, such as an extra pair of eyeglasses or set of contact lenses, false teeth, hearing aids and artificial limbs.
- Costs of alcohol- or drug-abuse treatments.
- Laser vision corrective surgery is a tax-allowable procedure.
- Medically necessary costs prescribed by a physician. That means if your doctor told you to add a humidifier to your home’s heating and air-conditioning system to relieve your chronic breathing problems, the device — and additional electricity costs to operate it — could be at least partially deductible.
- Some medical conference costs. You can count admission and transportation expenses to the conference if it concerns a chronic illness suffered by you, your spouse or a dependent. Meals and lodging costs while at the seminar, however, are not deductible.
- Weight-loss programs, in some instances, might count as a deductible medical expense, similar to stop-smoking programs. But the diet program must be medically necessary — for example, if a doctor recommends the regimen to reduce the health risks of obesity or hypertension.
Another way to get a tax break is with a medical flexible spending account. Check out Bankrate’s FSA calculator to see how participating in a plan can help you increase your take-home pay.
Special medical needs
If you have special needs, there are other costs you can write off, such as the cost of a wheelchair, crutches, equipment that enables a deaf person to use a telephone or devices that provide television closed-captioning. Don’t forget service animals for the blind or hearing-impaired, or the costs to retrofit your car with special hand controls, or space to hold a wheelchair.
Aging-in-place home remodels you can write off
- Installing ramps.
- Widening doors and hallways and lowering counters and cabinets.
- Adjusting electrical outlets and fixtures.
- Grading exterior landscape to ease access to the house.
Some home remodeling also might be just the prescription for a tax break, as long as you follow your doctor’s orders and IRS rules. If you need, for example, to add a chairlift to get up and down the stairs because of a medical condition, this is considered a legitimate expense.
Changes to your home to make it more accessible for a handicapped resident also are allowable. But keep in mind that you likely won’t be able to write off the full costs on your tax return. If the improvement increases the value of your property, that amount is subtracted from the project’s cost, and the difference counts as a medical expense.
Elevators generally aren’t deductible. The IRS considers them a structural change that could increase the value of your house and, therefore, doesn’t allow a medical deduction.
Medical, but not tax-deductible
Strictly cosmetic surgery, health-club dues or costs of a weight-loss program that is not medically necessary aren’t deductible.
Neither are hair transplant operations or, at the other extreme, electrolysis treatments.
Since there are no tax breaks, you might consider financing cosmetic or non-medical surgeries with a cash-back credit card.
For a complete list of what the IRS will and won’t allow you to count toward your medical deductions, check out Publication 502. You might find a few things there that apply to you — maybe just enough to get you over that 10 percent deduction hurdle.