If you had a lot of medical bills in 2018, you might be able to write off some of those expenses on your taxes. But your costs have to meet a threshold before they can be deducted.
The IRS lets you deduct qualified medical costs on your tax return as long as they are more than 7.5 percent of your adjusted gross income. Only costs that exceed that amount can be deducted.
For example, if your AGI is $45,000, you would multiply $45,000 by 0.075 and see that only medical expenses exceeding $3,375 can be deducted. If your medical bills for the year totaled $6,000, that leaves you with a medical expense deduction of $2,625.
Beginning Jan. 1, 2019, the medical expense threshold will rise to 10 percent of your AGI.
The threshold may seem unattainable, but you might meet it if you know what you can deduct.
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.
And don’t forget about medical bills you paid for a deceased dependent, whether before or after the person died.
Once you’re confident you know just whose costs are covered, be sure you don’t miss any.
Often-overlooked medical deductions:
- Travel expenses to and from medical treatments. For 2018 taxes, the medical travel rate is 18 cents per mile, up from 17 cents per mile in 2017.
- 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 expenses, 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.
- Eye surgery, such as Lasik, when it is not for cosmetic purposes only.
- Medically necessary costs prescribed by a physician. For example, if your doctor told you to add a humidifier to your home to relieve breathing problems, the humidifier 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 it to reduce the risks of obesity or hypertension.
Another way to get a tax break is with a medical flexible spending account, or FSA. An FSA lets you set aside before-tax money, up to a certain amount, with which to pay out-of-pocket medical expenses. The 2018 contribution limit for FSAs is $2,650.
“Many employers offer plans that allow you to pay a portion of your medical expenses with pre-tax dollars,” says Valrie Chambers, associate professor of taxation and accounting at Stetson University in DeLand, Florida.
“This is a very good deal – almost a guaranteed 15 to 25 percent discount for most services. It helps to absorb the economic shock of an illness – and it is a shock,” says Chambers, who strongly encourages workers with access to an FSA to sign up.
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 guide dogs 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.
- Adding a chairlift to get up and down stairs.
If you make changes to your home for medical reasons, you can deduct the cost as a medical expense. Expenses related to making your home more accessible for a handicapped resident also are deductible, but 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.
For example, let’s say you spend $60,000 to install an elevator in your home because you have a heart problem and can’t walk flights of stairs anymore. Your home was worth $200,000; the elevator raised the value to $240,000. The cost of the elevator minus the increase in your home value is what you can deduct – in this case, $20,000.
Medical costs that are 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.