Tax Day: Are My Medical Expenses Deductible?
Tax day is approaching quickly, so you may be searching for the correct ways to trim your IRS bill or increase your tax refund. Be sure not to overlook medical and dental expenses. According to the IRS, expenses associated with the “diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body” may be eligible for deduction.
But how do you know which expenses are fair game – and which cannot be deducted? What about the Health Coverage Tax Credit? Here are some answers to four of the most common questions:
What medical expenses can I deduct that I may not have known about?
The following are examples of expenses that you can deduct:
- Weight loss programs if the program is recommended by a physician following a diagnosis of obesity, heart disease, hypertension or another medical condition.
- The cost of transportation to another city if the purpose of the trip is to receive medical services. An additional $50 per night is allowable for an additional person, such as a spouse or a parent traveling with a sick child.
- Smoking cessation programs, including medication requiring a prescription. However, drugs that do not require a prescription, such as nicotine gum, are not eligible for deduction.
- The cost of birth control prescribed by a doctor.
- A wheelchair that is used primarily for sickness or disability.
- A wig purchased following the loss of hair from treatment, such as chemotherapy.
What expenses can I not deduct that I may have thought were eligible?
The following are examples of expenses that you cannot deduct:
- Health insurance costs that are eligible for the Health Coverage Tax Credit (HCTC).
- Medicine or drugs purchased or shipped from other countries.
- Health club or gym membership dues.
- Controlled substances, including medical marijuana, where legalized by state law.
- Medical expenses that are reimbursed by a Flexible Spending Account (FSA) or Health Savings Account (HSA).
- Expenses associated with housekeeping help, even if this help is recommended by a doctor. Some expenses, such as nursing services and long-term care may be deductible.
- Weight loss programs if the purpose of the program is for general health, physical appearance improvement or self-esteem improvement.
- Special diet food and beverages, even if you have been diagnosed with a specific medical condition requiring weight loss.
Can I deduct health insurance costs if I am self-employed?
If you are self-employed, you may be able to deduct health insurance costs as an adjustment to your income. These costs include insurance payments for yourself, a spouse and children under the age of 27. However, you cannot deduct insurance costs for any month in which you were eligible to participate in an insurance plan subsidized by your spouse’s employer. To determine your deduction amount, use the Health Insurance Deduction Worksheet in the Form 1040 instructions.
Do I qualify for the Health Coverage Tax Credit (HCTC)?
According to the IRS, HCTC covers 72.5 percent of qualified health insurance premiums for eligible individuals and their families. This credit is available on a monthly basis to cover premiums, or it may be taken on a yearly basis when filing an income tax return. HCTC covers displaced workers, individuals receiving benefits from the Pension Benefit Guaranty Corporation (PBGC) that are 55 years old or older, and individuals who have lost health insurance coverage at work. COBRA continuation coverage, coverage under a non-group (individual) health plan, and certain state health insurance plans may qualify.
Proper life insurance can also help protect you and your family, including your finances, when an unpredictable health issue/expense arises. For more information on deducting medical expenses, consult IRS publication 502 available at IRS.gov, or talk to your tax preparer.
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