Rx for Itemizing Medical Expenses

Posted on Thursday, September 28, 2017

Medical expenses can be costly — and they're not always covered by insurance. But there may be a silver lining: You may be able to claim an itemized deduction for the amounts you pay for medical, dental and vision care, if you incur enough costs to exceed the applicable threshold for the tax year. Here are the details about this deduction.

Raising the Bar on Medical Expense Deductions

Before 2013, you could claim an itemized deduction for medical, dental, and vision care expenses paid for you, your spouse and your dependents, to the extent those expenses exceeded 7.5% of your adjusted gross income (AGI). Now, because of a tax law change, an even higher threshold of 10% of AGI applies.  

Deducting Expenses Paid for Supported Relatives

Do you pay medical expenses for a dependent parent, grandparent or adult child? If so, you can add those expenses to your own for itemized deduction purposes. For a person to be your dependent, you must pay over half of his or her support for the year.

If you pass the support test, you can add medical expenses you paid for the supported person to your own expenses for purposes of clearing the applicable AGI hurdle for medical expense write-offs. This is true even if you can't claim a dependent exemption deduction for the supported person on your return because he or she has too much income.

What if you pay medical expenses for someone but don't supply over half of his or her support for the year? In that case, you can't combine that person's medical expenses with your own for medical expense deduction purposes.

Counting Insurance Premiums

For itemized medical expense deduction purposes, you can include premiums paid for medical, dental and vision-care insurance. You can also include premiums paid for Medicare Parts A, B and D coverage and for Medigap policies. Finally, you can include premiums paid for qualified long-term care insurance policies, subject to the following age-based limits in 2017, which are adjusted annually for inflation:

 

Maximum Amount Treated as
Medical Expense

Age at Dec. 31 of Tax Year

2017

 

40 or under

   $410 

 

41 to 50

$770

 

51 to 60

$1,530

 

61 to 70

$4,090

 

Over 70

$5,110

 

Getting the Most from Your Medical Expense Deductions

IRS rules regarding medical expense deductions have changed. For most taxpayers, it now takes more dental, medical and vision expenses than before to meet the AGI thresholds for these items. Whenever possible, try to pack as many doctor visits and non-emergency procedures into a single year, especially if it's questionable whether or not you'll meet the applicable AGI threshold.

Contact your tax advisor for more details. He or she can help ensure that you've met the applicable deduction threshold and included all IRS-approved medical expenses on your personal tax return.

IRS-Approved Medical Expenses

Here's a list of some common items that the IRS accepts as deductible medical expenses:

Ambulance
Acupuncture
Artificial limb
Artificial teeth
Bandages
Braille books and magazines
Chiropractor
Christian Science practitioner
Crutches
Dental care
Diagnostic devices
Eyeglasses
Eye surgery
Guide dog
Hearing aid
Hospitalization
Insulin

Laboratory fees
Long-term care services
Nursing home
Nursing services
Operation
Optometrist
Osteopath
Oxygen
Psychiatric care
Psychoanalysis
Stop smoking program
Therapy
Transplant
Transportation to receive medical care
Wheelchair
X-rays

Contact your tax advisor for a complete list of items that may be deductible. Your tax pro might offer creative suggestions that you might not think of, such as the cost of equipment to help a handicapped individual drive, the costs of special telephone or television equipment for the hearing impaired, and home improvements made for medical purposes (but only to the extent they don't add value to your home).

Posted in Tax Topics For Individuals

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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