Medical Expenses and Federal Income Tax

Over one third of taxpayers who file their federal income tax returns are able to use itemized deductions to decrease the amount of federal income tax they have to pay to the Internal Revenue Service (IRS).  One of those itemized deductions is medical expenses.

For medical expenses to be used as an itemized deduction, they must exceed 7.5% of the taxpayer’s adjusted gross income.  Starting in the tax year beginning January 1, 2013, medical expenses must exceed 10% of the taxpayer’s adjusted gross income in order to be deductible.

Because of this high percentage of adjusted gross income that medical expenses must exceed in order to be deductible on a taxpayer’s federal income tax, most taxpayers cannot take advantage of this deduction.  This deduction is reserved by design primarily for those with chronic or serious illnesses that run up significant medical expenses or for the elderly or others who have a low adjusted gross income, allowing for a relatively low amount of adjusted gross income to exceed the required threshold.

Medical expenses that can be deducted as itemized deductions include but may not be limited to the following:

  • Payments made to traditional medical professionals, generally regardless of field, including doctors, dentists, surgeons, optometrists, ophthalmologists, chiropractors, psychiatrists, and psychologists
  • Payments made to non-traditional medical professionals, including herbalists, acupuncturists, and others
  • Payments made for insurance premiums for medical care or long-term care
  • Payments made to hospitals, nursing homes, or other treatment centers such as centers for the treatment of alcohol or drug abuse, smoking, depression, or other habitual abuses
  • Payments made for food and treatment for weight loss, when the person has been diagnosed with a weigh-related disease such as obesity
  • Payments for prescriptions, whether for short-term or permanent treatment of a health issue
  • Payments for transportation to visit medical professionals or receive treatments related to an illness or disease, including tolls, parking, mileage, or taxi or ambulance fees
  • Payments for health-related aids, including glasses, contact lenses, false teeth, hearing aids, insulin pumps, crutches, and wheelchairs

There is also a list of common medical expenses that currently are not deductible as an itemized deduction.  These expenses include but may not be limited to the following:

  • Any of the above-listed medical expenses for which the taxpayer receives reimbursement or that is paid on the taxpayer’s behalf directly to the provider of the medical service or items, including payments made by the taxpayer’s insurance company or employer
  • Over-the-counter medications, toothpaste, toiletries, or cosmetics
  • Expenses related to cosmetic surgery

If you are trying to determine whether you have sufficient medical expenses to include them as itemized deductions on your federal income tax return, or you are unsure if certain expenses you paid qualify as a medical expense for deduction purposes, you should speak with tax attorney.  A tax attorney will have the education and experience to guide you thought the process of identifying all of you qualifying medical expenses and getting your federal income tax return file properly.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.