If you’re one of the many people who does have insurance but does not fully cover medical expenses such as unexpected emergencies, then you’re probably now finding ways to make sure it won’t consume a huge amount of your budget. Fortunately, the Internal Revenue Services offer some relief to many taxpayers by making some of these medical expenses partly tax-deductible. But first, you must know what is considered as a medical expense and how to claim the deduction for you to take advantage of it.
The threshold for deductible medical expenses that were supposed to remain at 10 percent got dropped back to 7.5 percent for 2017 and 2018 after the Tax Cuts and Jobs Act tweaked it in a favorable way. On your 2018 return, you are allowed to claim the deduction of your medical expenses that exceed just 7.5 percent of your adjusted gross income. This change however only applies to 2018. The threshold is slated to go back up to 10 percent beginning in 2019.
Your taxable income minus any adjustments to income such as such as deductions, contributions to a traditional IRA and student loan interest will be your adjusted gross income or AGI.
Qualifying medical expenses including preventative care, treatment, surgeries and dental and vision care, can be deducted according to the IRS. In addition to these, you may also deduct visits to psychologists and psychiatrist, prescription medications and appliances such as glasses, contacts, false teeth, and hearing aids.
There are rules that need to be followed when it comes to health insurance premiums that count as medical expenses for purposes of the deduction. As long as premiums for health, dental, and vision care insurance were paid using after-tax dollars, individuals are allowed to deduct them. These premiums are usually paid with pre-tax dollars by persons who have group insurance through their employer.
If you are covered under Social Security and is voluntarily enrolled in Medicare part A, you are allowed to deduct Medicare Party A premiums. You can also deduct Medicare Part B premiums and Medigap premiums, and Medicare Part D prescription drug insurance premiums.
If you spent money to travel for medical care such as mileage on your car, bus fare, and parking fees, the IRS also allows you to deduct them as expenses.
You are not allowed to deduct any medical expenses for which you received reimbursements such as from your insurance or employer. The IRS won't allow you to deduct expenses from your cosmetic procedures. Furthermore, other expenses such as the cost of non-prescription drugs (except insulin) or other purchases for general health such as toothpaste, health club dues, vitamins or diet food, non-prescription nicotine products or medical expenses paid in a different year are not deductible as well.
Taxpayers are required to itemize their deductions when claiming the medical expenses deduction. Since itemizing requires that you not take the standard deduction, you can only claim the medical expenses deduction if your itemized deductions are higher than your standard deduction. If this is a bit confusing to you, you can consider consulting an experienced tax professional who can help you with the tax preparation and help you save more money instead of just doing it yourself.
If you decide to prepare your tax return by yourself, you must remember to elect itemizing deductions and use IRS Form 1040 to file your taxes and attach Schedule A.
Remember, consider consulting an experienced tax professional who can simply ask you questions about your expenses and let you know which deductions you qualify for, as well as fill in all the required forms on your behalf.
