Claiming medical bills on your income tax can significantly reduce your tax liability. It’s a valuable opportunity for eligible taxpayers, especially those facing substantial healthcare expenses. Read on to discover how to leverage this benefit. At income-partners.net, we offer insights to help you navigate these tax considerations, ensuring you make informed decisions to optimize your financial strategies through medical expense deductions, healthcare partnership opportunities, and more.
1. Understanding the Basics: What Are Medical Expenses?
Yes, you can claim medical bills on your income tax, but there are specific rules and limitations. Medical expenses include costs for diagnosis, cure, mitigation, treatment, or prevention of disease, and for affecting any part or function of the body. These expenses cover legal medical services from physicians, surgeons, dentists, and other practitioners, as well as the costs of equipment, supplies, and diagnostic devices.
- Scope of Medical Expenses: Medical expenses must primarily aim to alleviate or prevent a physical or mental disability or illness. They don’t cover expenses merely beneficial to general health, such as vitamins or a vacation.
- Includible Expenses:
- Insurance premiums that cover medical care expenses.
- Transportation costs to get medical care.
- Amounts paid for qualified long-term care services.
- Amounts paid for qualified long-term care insurance contracts (with limitations).
2. Which Medical Expenses Can You Claim This Year?
You can include only medical and dental expenses you paid this year; payments for future medical or dental care are generally excluded. If you use a credit card, include medical expenses in the year the charge is made, not when the amount is paid.
- Timing of Payments: If you pay by check, the payment date is generally the day you mail or deliver it. For “pay-by-phone” or “online” accounts, use the date reported on the financial institution’s statement.
- Prior Year Expenses: If you missed claiming a deductible medical or dental expense in an earlier year, file Form 1040-X, Amended U.S. Individual Income Tax Return, to claim a refund. Claims must typically be filed within three years from the original return date or two years from when the tax was paid, whichever is later.
- Expenses Paid by Others: You can’t include medical expenses paid by insurance companies or other sources, whether the payments were made to you, the patient, or the provider.
- Separate vs. Joint Returns: In non-community property states, if you and your spouse file separately, include only the medical expenses each of you actually paid. Expenses paid from a joint account are considered paid equally unless you can prove otherwise. In community property states, expenses paid from community funds are generally divided equally.
3. Calculating Your Deduction: How Much Can You Deduct?
Generally, you can deduct only the amount of your medical and dental expenses exceeding 7.5% of your Adjusted Gross Income (AGI) on Schedule A (Form 1040).
- AGI Threshold: The 7.5% AGI threshold determines the amount of medical expenses you can deduct. For example, if your AGI is $60,000, the threshold is $4,500. If your medical expenses total $7,000, you can deduct $2,500 ($7,000 – $4,500).
- Accurate Record-Keeping: Maintaining detailed records of all medical expenses is crucial for accurately calculating your deduction. Keep receipts, invoices, and statements to support your claims.
- Consulting a Tax Professional: Given the complexities of tax laws, consulting a tax professional can ensure you maximize your deductions while remaining compliant. Visit income-partners.net for resources and connections to tax experts who can assist with your specific needs.
4. Qualifying Individuals: Whose Medical Expenses Can You Include?
You can include medical expenses you pay for yourself, your spouse, or a dependent when the services were provided or when you paid for them. Specific rules apply to decedents and multiple support agreements.
- Spouse: Include medical expenses you paid for your spouse if you were married when the services were received or when you paid the expenses.
- Dependents: You can include medical expenses for someone who was your dependent when the services were provided or when you paid the expenses.
- Qualifying Child: A qualifying child must meet specific criteria, including age and residency requirements. For example, they must be under 19 at the end of the year (or under 24 if a full-time student) and live with you for more than half the year.
- Qualifying Relative: A qualifying relative must meet relationship, residency, and support requirements. You must provide over half of their support.
- Decedent: Medical expenses paid before death are included on the decedent’s final income tax return, covering the decedent, their spouse, and dependents.
5. Claiming Medical Expenses for a Spouse
You can include medical expenses you paid for your spouse if you were married when the medical services were provided or when you paid the expenses.
- Scenario 1: Treatment Before Marriage: If your spouse received treatment before you married but you paid for it after getting married, you can include these expenses, even when filing separate returns.
- Scenario 2: Expenses Paid by Deceased Spouse: If your spouse paid the expenses, you can’t include them on your separate return. The amounts paid by your spouse are included on their separate return. If you file a joint return, include all medical expenses paid by both of you during the year.
- Example: This year, you paid medical expenses for Kitt, your spouse who died last year. You married Royal this year and file jointly. Because you were married to Kitt when the services were received, you can include those expenses on this year’s return.
6. Claiming Medical Expenses for a Dependent
Include medical expenses you paid for your dependent if the person was your dependent when the medical services were provided or when you paid the expenses. To claim them, the person must generally qualify as your dependent.
- Qualifying Dependents: Even if a person received gross income of $5,050 or more, filed a joint return, or you could be claimed as a dependent on someone else’s return, you can still include their medical expenses.
- Exception for Adopted Children: If you are a U.S. citizen or national, an adopted child living with you doesn’t have to be a U.S. citizen, national, or resident of the U.S., Canada, or Mexico.
- Child of Divorced or Separated Parents: For medical and dental expenses, a child of divorced or separated parents can be treated as a dependent of both parents.
7. Special Cases: Qualifying Child and Adopted Child
A qualifying child must meet specific criteria to be considered your dependent for medical expense deductions.
- Qualifying Child Criteria: The child must be your son, daughter, stepchild, foster child, brother, sister, or a descendant of any of them. They must be under age 19 at the end of the year (or under 24 if a full-time student) and younger than you (or your spouse if filing jointly), or any age and permanently and totally disabled. They must also live with you for more than half of the year and not provide over half of their own support.
- Adopted Child Considerations: A legally adopted child is treated as your own child. Include expenses paid before adoption if the child qualified as your dependent when the services were provided or when the expenses were paid. If you reimburse an adoption agency for medical expenses they paid under an agreement, you’re treated as having paid those expenses, provided you can clearly substantiate the payment is directly attributable to the child’s medical care.
8. Understanding Qualifying Relative Status
A qualifying relative is a person who meets specific criteria regarding relationship, income, and support to be considered your dependent for medical expense deductions.
- Qualifying Relative Criteria: This includes a son, daughter, stepchild, or foster child, brother, sister, half-brother, half-sister, or an ancestor or sibling of your parents (grandmother, grandfather, aunt, uncle). It also includes in-laws and any other person (other than your spouse) who lived with you all year as a member of your household.
- Multiple Support Agreement: If you are considered to have provided more than half of a qualifying relative’s support under a multiple support agreement, you can include medical expenses you pay for that person.
9. Medical Expenses for a Deceased Person
Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent’s final income tax return, including expenses for the decedent’s spouse and dependents.
- Payment After Death: The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent’s estate for the decedent’s medical care as paid by the decedent when the medical services were provided. The expenses must be paid within one year of the date of death.
- Claiming Expenses: If you are the survivor or personal representative, attach a statement to the decedent’s Form 1040 or 1040-SR (or amended return, Form 1040-X) stating the expenses haven’t been and won’t be claimed on the estate tax return.
- Example: Hudson properly filed a 2023 income tax return and died in 2024 with unpaid medical expenses of $1,500 from 2023 and $1,800 in 2024. If paid within the 1-year period, Hudson’s survivor can file an amended return for 2023, claiming a deduction based on the $1,500 expenses. The $1,800 can be included on the decedent’s final return for 2024.
10. Medical Expenses You Can Include: A Comprehensive List
Numerous items qualify as medical expenses. The following is an alphabetical list of commonly includible expenses:
| Expense Category | Description |
|---|---|
| Abortion | The amount you pay for a legal abortion. |
| Acupuncture | The amount you pay for acupuncture. |
| Alcoholism | Amounts for inpatient treatment at a therapeutic center for alcohol addiction, including meals and lodging. Transportation to alcohol recovery support meetings if medically advised. |
| Ambulance | Amounts you pay for ambulance service. |
| Artificial Limb | The amount you pay for an artificial limb. |
| Artificial Teeth | The amount you pay for artificial teeth. |
| Bandages | The cost of medical supplies such as bandages. |
| Birth Control Pills | The amount you pay for birth control pills prescribed by a doctor. |
| Body Scan | The cost of an electronic body scan. |
| Braille Books | The part of the cost of Braille books and magazines for use by a visually impaired person that is more than the cost of regular printed editions. |
| Breast Pumps | The cost of breast pumps and supplies that assist lactation. |
| Reconstruction Surgery | Amounts for breast reconstruction surgery and breast prosthesis following a mastectomy for cancer. |
| Car (Special Equipment) | Include the cost of special hand controls and other special equipment installed in a car for the use of a person with a disability. |
| Handrails or Grab Bars | Include the cost of Installing handrails, support bars, or other modifications to bathrooms. |
| Porch Lifts and other forms of lifts | Include the cost of Installing porch lifts and other forms of lifts (but elevators generally add value to the house). |
Image: Installing ramps and modifications to bathrooms are eligible for medical expense deductions.
11. Medical Expenses You Can Include: Capital Expenses and Car Modifications
Capital expenses and car modifications primarily for medical care can be included in medical expenses.
- Capital Expenses: Include amounts paid for special equipment installed in a home or for improvements if their main purpose is medical care for you, your spouse, or your dependent. The cost is reduced by any increase in the property’s value. Certain improvements for disabled conditions don’t usually increase the home’s value and can be fully included, such as constructing entrance or exit ramps, widening doorways, installing railings, and modifying kitchens or bathrooms.
- Car Modifications: Include the cost of special hand controls and other equipment installed in a car for a person with a disability. You can also include the difference between the cost of a regular car and a car specially designed to hold a wheelchair.
12. More Includible Medical Expenses: Chiropractors to Contact Lenses
Fees paid to chiropractors, Christian Science practitioners, and costs associated with condoms and contact lenses are includible medical expenses.
- Chiropractor: Fees paid to a chiropractor for medical care.
- Christian Science Practitioner: Fees paid to Christian Science practitioners for medical care.
- Condoms: The amount you pay to purchase condoms.
- Contact Lenses: Amounts paid for contact lenses needed for medical reasons, as well as equipment and materials required for use, such as saline solution and enzyme cleaner.
13. Dental Treatment, Diagnostic Devices, and Care for Disabled Dependents
Include amounts paid for dental treatment, diagnostic devices, and certain expenses for disabled dependent care.
- Dental Treatment: Amounts paid for the prevention and alleviation of dental disease, including teeth cleaning, sealants, fluoride treatments, X-rays, fillings, braces, extractions, and dentures.
- Diagnostic Devices: The cost of devices used in diagnosing and treating illness and disease.
- Disabled Dependent Care Expenses: Some disabled dependent care expenses may qualify as either medical expenses or work-related expenses for purposes of taking a credit for dependent care. You can choose to apply them either way as long as you don’t use the same expenses to claim both a credit and a medical expense deduction.
14. Drug Addiction, Eye Care, and Fertility Enhancement
Amounts for drug addiction treatment, eye care, and fertility enhancement procedures can be included as medical expenses.
- Drug Addiction: Amounts for inpatient treatment at a therapeutic center for drug addiction, including meals and lodging. Transportation to drug treatment meetings if medically advised.
- Eye Exam and Eyeglasses: Amounts paid for eye examinations and eyeglasses and contact lenses needed for medical reasons.
- Eye Surgery: Amounts paid for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy.
- Fertility Enhancement: Costs of procedures such as in vitro fertilization and surgery to overcome an inability to have children.
15. Guide Dogs, Health Institutes, and HMOs
Costs for guide dogs or service animals, fees for treatment at a health institute, and amounts paid to health maintenance organizations (HMOs) are includible medical expenses.
- Guide Dog or Other Service Animal: Costs of buying, training, and maintaining a guide dog or service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities.
- Health Institute: Fees for treatment at a health institute only if the treatment is prescribed by a physician and the physician issues a statement that the treatment is necessary to alleviate a physical or mental disability or illness.
- Health Maintenance Organization (HMO): Amounts paid to entitle you, your spouse, or a dependent to receive medical care from an HMO. These amounts are treated as medical insurance premiums.
16. Hearing Aids, Home Care, and Hospital Services
Costs for hearing aids, home care, and hospital services are considered medical expenses that can be included for deduction purposes.
- Hearing Aids: The cost of a hearing aid and batteries, repairs, and maintenance needed to operate it.
- Home Care: See Nursing Services, later.
- Hospital Services: Amounts paid for inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. This includes amounts paid for meals and lodging. Also see *Lodging*, later.
17. Insurance Premiums: What You Can and Can’t Include
Insurance premiums you pay for policies that cover medical care can be included, but there are exceptions and specific rules.
- Includible Premiums: Policies that cover hospitalization, surgical services, X-rays, prescription drugs, dental care, replacement of lost contact lenses, and long-term care (subject to limitations). If a policy provides payments for other than medical care, include premiums for the medical care part if the charge is reasonable and separately stated.
- Employer-Sponsored Health Insurance Plan: Don’t include premiums paid by an employer-sponsored plan unless the premiums are included on your Form W-2.
- Long-Term Care Services: Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending arrangement must be included in your income and reported as wages on your Form W-2.
- Retired Public Safety Officers: Don’t include health or long-term care insurance premiums paid with tax-free distributions from a retirement plan.
- Health Reimbursement Arrangement (HRA): If you have medical expenses reimbursed by an HRA, you can’t include those expenses.
- Medicare Premiums: Medicare Part A (if voluntarily enrolled), Part B, and Part D premiums are includible medical expenses.
- Premiums You Can’t Include: Premiums for life insurance, policies for loss of earnings, loss of life, or guaranteed amounts each week if hospitalized are not includible. Also, you can’t deduct additional premiums paid as a result of including on your policy someone who isn’t your spouse or dependent (with certain exceptions).
18. Additional Medical Expenses: Lead Removal to Lifetime Care
Include costs associated with lead-based paint removal, legal fees for authorizing treatment for mental illness, and a portion of lifetime care fees.
- Lead-Based Paint Removal: The cost of removing lead-based paints from surfaces in your home to prevent a child who has or had lead poisoning from eating the paint.
- Legal Fees: Legal fees necessary to authorize treatment for mental illness.
- Lifetime Care—Advance Payments: Part of a life-care fee or “founder’s fee” paid under an agreement with a retirement home, properly allocable to medical care.
- Lodging: Include the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care. You may be able to include the cost of lodging not provided in a hospital or similar institution if the lodging is primarily for and essential to medical care, provided by a doctor in a licensed hospital, not lavish, and without significant personal pleasure.
19. Long-Term Care Services and Insurance Contracts
Amounts paid for qualified long-term care services and certain premiums for qualified long-term care insurance contracts are includible medical expenses.
- Qualified Long-Term Care Services: Necessary diagnostic, preventive, therapeutic, curing, mitigating, rehabilitative services, and maintenance and personal care services required by a chronically ill individual and provided pursuant to a plan of care prescribed by a licensed health care practitioner.
- Qualified Long-Term Care Insurance Contracts: An insurance contract that provides only coverage of qualified long-term care services.
20. Deductible Long-Term Care Premiums: Age-Based Limits
The amount of qualified long-term care premiums you can include is limited based on age.
| Age | Limit |
|---|---|
| Age 40 or under | $470 |
| Age 41 to 50 | $880 |
| Age 51 to 60 | $1,760 |
| Age 61 to 70 | $4,710 |
| Age 71 or over | $5,880 |
21. Meals, Medical Conferences, and Medicines
Include the cost of meals at a hospital, admission and transportation to medical conferences, and amounts for prescribed medicines and drugs.
- Meals: The cost of meals at a hospital or similar institution if a principal reason for being there is to get medical care.
- Medical Conferences: Admission and transportation to a medical conference if the conference concerns the chronic illness of yourself, your spouse, or your dependent and is primarily for medical care.
- Medicines: Amounts paid for prescribed medicines and drugs. A prescribed drug requires a prescription by a doctor for its use by an individual. You can also include amounts you pay for insulin.
22. Nursing Home, Nursing Services, and Operations
Costs associated with nursing home care, nursing services, and legal operations are includible medical expenses.
- Nursing Home: The cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. This includes the cost of meals and lodging if a principal reason for being there is to get medical care.
- Nursing Services: Wages and other amounts you pay for nursing services. These services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse.
- Operations: Amounts you pay for legal operations that aren’t for cosmetic surgery.
23. Optometrist, Organ Donors, and Osteopath
Fees paid to optometrists, expenses related to organ donation, and fees paid to osteopaths are includible medical expenses.
- Optometrist: See *Eyeglasses*, earlier.
- Organ Donors: Amounts paid for medical care you receive because you are a donor or a possible donor of a kidney or other organ.
- Osteopath: Amounts you pay to an osteopath for medical care.
24. Oxygen, Physical Exams, and Pregnancy Tests
Costs for oxygen and equipment, physical examinations, and pregnancy test kits are includible medical expenses.
- Oxygen: Amounts you pay for oxygen and oxygen equipment to relieve breathing problems caused by a medical condition.
- Physical Examination: The amount you pay for an annual physical examination and diagnostic tests by a physician.
- Pregnancy Test Kit: The amount you pay to purchase a pregnancy test kit to determine if you are pregnant.
25. Personal Protective Equipment and Prosthesis
Amounts paid for personal protective equipment and prosthesis can be included as medical expenses.
- Personal Protective Equipment: Include the amounts you pay for personal protective equipment, such as masks, hand sanitizer and hand sanitizing wipes, for the primary purpose of preventing the spread of Coronavirus Disease 2019 (COVID-19).
- Prosthesis: See *Artificial Limb and [Breast Reconstruction Surgery](#en_US_2022_publink1000178899 “Breast Reconstruction Surgery”)*, earlier.
26. Psychiatric Care, Psychoanalysis, and Psychologists
Amounts paid for psychiatric care, psychoanalysis, and psychologists are includible medical expenses.
- Psychiatric Care: Amounts you pay for psychiatric care, including the cost of supporting a mentally ill dependent at a specially equipped medical center.
- Psychoanalysis: Payments for psychoanalysis, excluding payments for training to be a psychoanalyst.
- Psychologist: Amounts you pay to a psychologist for medical care.
27. Special Education and Sterilization Procedures
Costs related to special education for learning disabilities and sterilization procedures are includible medical expenses.
- Special Education: Fees you pay on a doctor’s recommendation for a child’s tutoring by a teacher who is specially trained and qualified to work with children who have learning disabilities caused by mental or physical impairments. Also, the cost of attending a school that furnishes special education to help a child overcome learning disabilities.
- Sterilization: The cost of a legal sterilization (a legally performed operation to make a person unable to have children). Also see *Vasectomy*, later.
28. Stop-Smoking Programs and Surgery
Amounts paid for stop-smoking programs and legal surgeries are includible medical expenses.
- Stop-Smoking Programs: Amounts you pay for a program to stop smoking.
- Surgery: See *Operations*, earlier.
29. Telephone, Television, and Therapy Equipment
Costs associated with special telephone and television equipment for those with disabilities, as well as therapy costs, are includible medical expenses.
- Telephone: The cost of special telephone equipment that lets a person who is deaf, hard of hearing, or has a speech disability communicate over a regular telephone.
- Television: The cost of equipment that displays the audio part of television programs as subtitles for persons with a hearing disability.
- Therapy: Amounts you pay for therapy received as medical treatment.
30. Transplants and Transportation Costs
Costs associated with transplants and transportation for medical care are includible medical expenses.
- Transplants: Amounts paid for medical care you receive because you are a donor or a possible donor of a kidney or other organ.
- Transportation: Amounts paid for transportation primarily for, and essential to, medical care.
- This can include bus, taxi, train, or plane fares or ambulance service.
- Transportation expenses of a parent who must go with a child who needs medical care.
- Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone.
- Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment.
31. Trips and Tuition Costs Related to Medical Treatment
Under special circumstances, costs associated with trips and tuition can be included as medical expenses.
- Trips: Amounts you pay for transportation to another city if the trip is primarily for, and essential to, receiving medical services. You may be able to include up to $50 for each night for each person for lodging.
- Tuition: Under special circumstances, you can include charges for tuition in medical expenses. See *Special Education*, earlier.
32. Vasectomy, Vision Correction, and Weight-Loss Programs
The cost of a vasectomy, vision correction surgery, and certain weight-loss programs can be included as medical expenses.
- Vasectomy: The amount you pay for a vasectomy.
- Vision Correction: See *Eye Surgery*, earlier.
- Weight-Loss Program: Amounts you pay to lose weight if it is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease).
33. Wheelchairs, Wigs, and X-Rays as Medical Expenses
Costs associated with wheelchairs, wigs (under certain conditions), and X-rays are includible medical expenses.
- Wheelchair: The amounts you pay for a wheelchair used for the relief of a sickness or disability. The cost of operating and maintaining the wheelchair is also a medical expense.
- Wig: The cost of a wig purchased upon the advice of a physician for the mental health of a patient who has lost all of their hair from disease.
- X-ray: Amounts you pay for X-rays for medical reasons.
34. Medical Expenses You Can’t Include: An Overview
While many expenses qualify for the medical expense deduction, certain items are not includible. These are listed below in alphabetical order.
- Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby: You can’t include in medical expenses amounts you pay for the care of children, even if the expenses enable you, your spouse, or your dependent to get medical or dental treatment.
- Controlled Substances: You can’t include in medical expenses amounts you pay for controlled substances (such as marijuana, laetrile, etc.) that aren’t legal under federal law, even if such substances are legalized by state law.
- Cosmetic Surgery: Generally, you can’t include in medical expenses the amount you pay for cosmetic surgery.
- Dancing Lessons: You can’t include in medical expenses the cost of dancing lessons, swimming lessons, etc., even if they are recommended by a doctor, if they are only for the improvement of general health.
- Diaper Service: You can’t include in medical expenses the amount you pay for diapers or diaper services, unless they are needed to relieve the effects of a particular disease.
- Electrolysis or Hair Removal: See *Cosmetic Surgery*, earlier.
- Funeral Expenses: You can’t include in medical expenses amounts you pay for funerals.
- Future Medical Care: Generally, you can’t include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year.
- Hair Transplant: See *Cosmetic Surgery*, earlier.
- Health Club Dues: You can’t include in medical expenses health club dues or amounts paid to improve one’s general health or to relieve physical or mental discomfort not related to a particular medical condition.
- Household Help: You can’t include in medical expenses the cost of household help, even if such help is recommended by a doctor.
- Illegal Operations and Treatments: You can’t include in medical expenses amounts you pay for illegal operations, treatments, or controlled substances whether rendered or prescribed by licensed or unlicensed practitioners.
- Maternity Clothes: You can’t include in medical expenses amounts you pay for maternity clothes.
- Medicines and Drugs From Other Countries: In general, you can’t include in your medical expenses the cost of a prescribed drug brought in (or ordered and shipped) from another country.
- Nonprescription Drugs and Medicines: Except for insulin, you can’t include in medical expenses amounts you pay for a drug that isn’t prescribed.
- Nutritional Supplements: You can’t include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc., unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician.
- Personal Use Items: You can’t include in medical expenses the cost of an item ordinarily used for personal, living, or family purposes unless it is used primarily to prevent or alleviate a physical or mental disability or illness.
- Swimming Lessons: See *Dancing Lessons*, earlier.
- Teeth Whitening: You can’t include in medical expenses amounts paid to whiten teeth.
- Veterinary Fees: You generally can’t include veterinary fees in your medical expenses, but see *Guide Dog or Other Service Animal under What Medical Expenses Are Includible*, earlier.
- Weight-Loss Program: You can’t include in medical expenses the cost of a weight-loss program if the purpose of the weight loss is the improvement of appearance, general health, or sense of well-being.
35. How To Treat Reimbursements: Reducing Your Medical Expenses
You can include in medical expenses only those amounts paid during the tax year for which you received no insurance or other reimbursement.
- Insurance Reimbursement: You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year.
- Health Reimbursement Arrangement (HRA): An HRA is an employer-funded plan that reimburses employees for medical care expenses and allows unused amounts to be carried forward.
36. Insurance Reimbursement Exceeding Medical Expenses
If you are reimbursed more than your medical expenses, you may have to include the excess in income. Generally, you don’t include the excess reimbursement in your gross income if you pay either the entire premium for your medical insurance or all the costs of a plan similar to medical insurance.
- Premiums Paid by You and Your Employer: If both you and your employer contribute to your medical insurance plan and your employer’s contributions aren’t included in your gross income, you must include in your gross income the part of your excess reimbursement that is from your employer’s contribution.
37. Handling Reimbursement in a Later Year and Un-Deducted Expenses
If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you must generally report the reimbursement as income up to the amount you previously deducted as medical expenses. If you didn’t deduct a medical expense in the year you paid it, don’t include the reimbursement in income.
38. Figuring and Reporting Your Medical Expense Deduction
Once you have determined which medical expenses you can include, figure and report the deduction on your tax return using Schedule A (Form 1040).
- Recordkeeping: You should keep records of your medical and dental expenses to support your deduction. Don’t send these records with your paper return.
39. Tax Implications of Selling Medical Equipment or Property
If you deduct the cost of medical equipment or property in one year and sell it in a later year, you may have a taxable gain.
- Taxable Gain: The taxable gain is the amount of the selling price that is more than the adjusted basis of the equipment or property. The adjusted basis is the portion of the cost of the equipment or property that you couldn’t deduct because of the 7.5% AGI limit.
40. Damages for Personal Injuries and Future Medical Expenses
If you receive an amount in settlement of a personal injury suit, part of that award may be for medical expenses that you deducted in an earlier year. Include that part in your income to the extent it reduced your taxable income in the earlier year. For future medical expenses, you must reduce any future medical expenses for these injuries until the amount you received has been completely used.
41. Claiming Impairment-Related Work Expenses
If you are a person with disabilities, you can take a business deduction for expenses necessary for you to work. These are not subject to the 7.5% limit that applies to medical expenses.
- Impairment-Related Expenses Defined: Ordinary and necessary business expenses that are necessary for you to do your work satisfactorily, for goods and services not required in your personal activities, and not specifically covered under other income tax laws.
- Where to Report: If self-employed, deduct the expenses on Schedule C, E, or F. If an employee, complete Form 2106, Employee Business Expenses.
42. Health Insurance Costs for Self-Employed Individuals
If you were self-employed and had a net profit for the year, you may be able to deduct amounts paid for health insurance for yourself, your spouse, your dependents, and your children under age 27.
- Eligibility: You were self-employed if you were a general partner (or a limited partner receiving guaranteed payments) or received wages from an S corporation in which you were more than a 2% shareholder. The insurance plan must be established under your trade or business, and the deduction can’t be more than your earned income from that trade or business.
