What Medical Expenses Can Be Written Off on Taxes?
Many caregivers and their elderly parents rack up thousands of dollars every year in medical expenses. Items not covered by Medicare, co-pays and deductibles, even the amount of gas used to get to doctor's appointments.
Depending on the total amount you've spent, you might be able to deduct those medical expenses from your taxes. However, you have to have an awful lot of medical expenses in order to take the deduction.
There are a number of hurdles that must be overcome for a caregiver to deduct medical expenses for the person to whom the care is provided," says Mark Luscombe, CPA, JD, LLM, and Principal Federal Tax Analyst at Wolters Kluwer Tax & Accounting (cchgroup.com) and noted expert on the U.S. tax code. "The person receiving the care must meet certain support, income, relationship, citizenship and other tests.
"The medical expenses must be of the type approved by the IRS as qualifying for the medical expense deduction," Luscombe says.
To qualify for the deduction, the total cost of your unreimbursed medical expenses must exceed 10 percent of your adjusted gross income or 7.5 percent if either you or your spouse was 65 or older at some point in 2016. For example, if your adjusted gross income is $50,000, then the first $5,000 of medical expenses don't count. Starting in 2017, the 10-percent threshold applies for everyone regardless of age.
"If all the requirements can be met, the caregiver can get significant tax benefits from writing off medical expenses incurred on behalf of the person receiving care," says Luscombe.
So take the time to add up the amount of medical expenses you (or your elderly parent) pay out-of-pocket during year. If it is enough, you can deduct those expenses on the tax return.
Here is an abbreviated list of medical expenses that are tax deductible:
- Adapters to TV sets and telephones for hearing impaired
- Braille books and magazines
- Capital improvements to your home to accommodate a disability
- Car - Cost of special equipment so disabled person can drive
- Contact lenses plus wetting and cleaning solutions
- Dental care
- Diagnostic devices (such as a blood sugar test kit)
- Prescription drugs
- Eye surgery
- Hearing aid
- In-home health care (NOT custodial care)
- Insurance premiums, co-pays and deductibles for health insurance, dental and eye insurance, and long-term-care insurance.
- Laboratory fees
- Lifetime care fees (percentage of fees paid under lifetime contract with a continuing care retirement community)
- Long-term care services prescribed by a licensed health care practitioner for a chronically ill individual
- Meals (while staying in a hospital or similar facility)
- Medicare Part B and Part D premiums
- Nursing home and assisted living costs
- Nursing services
- Oxygen therapy and related equipment
- Prescription drugs and medicine (Drugs from Canadian and foreign pharmacies are not deductible.)
- Psychiatric care
- Stop-smoking programs
- Transportation to receive medical care (mileage, parking, tolls)
- Weight-loss program (if part of treatment for specific disease or condition, such as obesity)
A complete list of deductible medical expenses is available in IRS Publication 502: Medical and Dental Expenses.
The most common way people treat their health costs on their tax forms is by claiming an itemized deduction, on Schedule A of the 1040, for out-of-pocket medical expenses.