The IRS allows you to deduct a certain amount of your medical expenses from your taxes. However, this can be a complex issue if you’ve never found yourself in this situation before.
We are going to show which medical expense tax deductions you can take when you file your tax returns.
You’ll find out how they work, how they are deducted from taxes, and how to claim the medical expense tax deduction.
Table of Contents
How Do Medical Tax Deductions Work?
Medical tax deductions don’t work like other tax deductions. There’s a ceiling where you can only deduct qualified medical expenses if they total more than 7.5% of your adjusted gross income for the years 2017 and 2018. From 2019, which will be reflected in your tax return, this amount goes up to 10% of adjusted gross income.
What is adjusted gross income?
This is your taxable income minus deductions, traditional IRA contributions, and any student loan interest you have. So, the amount you can deduct is smaller than you might think.
What Medical Costs are Tax Deductible?
Qualifying medical expenses are particular, according to the IRS guidelines. Here’s a short rundown of the most common qualifying medical expenses:
- Preventative care
- Dental care
- Vision care
- Visits to psychiatrists and psychologists
- Travel expenses, such as car mileage and parking fees
Any expenses that are reimbursed through an insurance policy are not deductible. Furthermore, cosmetic procedures don’t count as deductible expenses, as well as non-prescription drugs, except for insulin. General health products, such as vitamins and toothpaste, are also not deductible.
Are Medical Premiums Tax Deductible?
Medical premiums are tax-deductible, but you must pay out of your own pocket. If your employer covers part of the cost, only the amount you pay is tax-deductible.
Furthermore, if your medical expenses don’t count for more than 7.5% of your adjusted gross income this coming tax year, you won’t be able to deduct anything.
How to Calculate IRS Medical Tax Deductions
The first step is to calculate your adjusted gross income, which we’ve detailed how to do above. So, let’s say you have $45,000 in adjusted gross income.
For the current tax year, you have had $5,475 of qualifying medical expenses. The way to do it is to multiply your adjusted gross income by 0.075. This will tell you how much can be deducted. In this case, you can now deduct $2,100 in medical expenses from your tax return. The calculation is the same, regardless of your adjusted gross income.
If you’re itemizing your expenses, just write down your adjusted gross income, enter 7.5% of this figure, and the difference between your costs and the 7.5% you just wrote down. You should also add any standard deductions that you’re entitled to.
How to Claim Medical Tax Deductions
Claiming medical tax deductions couldn’t be easier with online tax filing. The tax software will ask you some questions about your expenses, reveal the deductions you qualify for, and then automatically populate the current tax forms for you.
It removes much of the complexity involved with figuring out medical expenses and which deductions you’re entitled to. It’s also much more cost-effective than hiring an accountant and a tax preparer! File your taxes online in minutes and have peace of mind this tax season!