How to Claim a Medical Expense Tax Deduction

Medical expenses can damage your budget tremendously, especially when the emergency is unexpected and your insurance does not cover it.

Medical expense tax deduction

The good news is the IRS does allow you to have some relief from medical expenses with a medical tax deduction.

However, to take advantage of their leniency, you must know what is considered a medical expense and how to claim the medical tax deduction.

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Deduction Value for Medical Expenses

The IRS allows you to deduct your qualified medical expenses that exceed 10% of your AGI.

For example, let’s say you had an AGI of $45,000 and $5,475 in qualified medical expenses.

You would have to multiply $45,000 by 10% to find that only expenses exceeding $4,500 could be deducted, which means your deduction would be $975.

Those over the age of 65 can deduct qualified medical expenses that exceed 7.5% of their AGI.

Qualified IRS Medical Deductions

  • Prevent care
  • Treatment
  • Surgeries
  • Dental and vision care
  • Psychologists and psychiatrists visits
  • Prescription medications and appliances
  • Travel expenses for medical care

How to Deduct Medical Expenses For Tax Purposes

How to Claim the Medical Expenses Deduction

To claim the medical expenses deduction, you have to itemize your deductions. Additionally, you should only claim this deduction if it is higher than the standard deduction.

Keep in mind, if you file your taxes online, the software will ask you the correct questions to help you claim the medical deductions you qualify for and guarantee you will receive the largest refund ever.

If you decide to itemize your deductions, you have to file Form 1040 and attach Schedule A.

  1. Report the total medical expenses you paid on line 1 of Schedule A and your AGI from line 38 on Form 1040 on line 2.
  2. Put 10% of your AGI on line 3
  3. Enter the differences on line 4
  4. The results on line 4 will be subtracted from your AGI to show your taxable income.
  5. If this amount is less than your standard deduction, stick with the standard deduction.

Non-Deductible Medical Expenses

Any medical expenses that you are reimbursed for are considered non-deductible.

Additionally, you cannot deduct cosmetic procedures, non-prescription drugs (insulin is excluded), and general health items. You also can only deduct the expenses during the tax year that they occurred.

Itemizing Deductions

Itemizing deductions are ideal for self-employed and have a lot of out-of-pocket medical expenses and investments.

In addition, business owners also itemize deductions for personal business expenses on their individual returns.

However, it is important to view the updated list of accepted deductions and their limitations before completing your tax return.

Itemizing deductions is tricky. Some have a floor or minimum amount, allowing for deductions over set dollar amounts.

Another twist with itemizing deductions is limits for taxpayers based upon income amount. This income limit can also change as inflation adjustments are made to standard deductions.

This does not mean that your deduction will not count. It may just reduce the amount of the deduction that you can take.

Tips for staying organized for itemized deductions:

  • Keep separately labeled files for each expense
  • Date every expense
  • Keep records in chronological order
  • Obtain copies of donations, mortgage interest, medical expenses, mileage, and other miscellaneous expenses

To file your itemized deductions, you will use form 1040 Schedule A. This form must be attached to and/or submitted with your completed form 1040.

Get Your W2 Online and Claim the Medical Expenses Tax Deduction

Many people overlook the potential benefits of claiming their medical expenses because they find it challenging to track everything down.

Using an online W2 finder can save time and headaches. Getting your W-2 online has numerous advantages compared to the traditional paper format.

With online access, you can retrieve your W-2 form anytime and from anywhere, as long as you have an internet connection.

This means that you don't need to wait for days or weeks for the physical copy to arrive in your mailbox. You can start filing your taxes right away.