1. Qualifying Medical Expenses
Medical expenses that can be deducted from your taxes include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease. To qualify, expenses must primarily alleviate or prevent a physical or mental defect or illness.
Subtopics:
- Doctor and Hospital Fees: Payments to medical professionals, inpatient hospital care, and nursing services.
- Prescription Medication and Devices: Costs for prescribed medications and medical appliances such as glasses, contacts, braces, and prosthetics.
- Insurance Premiums: Premiums for medical, dental, and some long-term care insurance if they are not already tax-deducted from your income.
- Transportation and Travel: Costs for essential transportation to and from medical care, including taxi fares, personal vehicle mileage, and parking fees.
Practical Tips:
- Keep Detailed Records: Save all receipts and documents related to medical expenses, including travel receipts.
- Itemize Deductions: To claim these expenses, you must itemize your deductions on Form 1040, Schedule A.
Qualification Criteria:
- 7.5% AGI Threshold: Your total medical expenses must exceed 7.5% of your adjusted gross income (AGI) to begin deducting.
2. Non-Qualifying Expenses
Not all medical costs are deductible. Non-qualifying expenses include cosmetic procedures, non-prescribed drugs (except insulin), and general health items like vitamins and gym memberships.
Subtopics:
- Cosmetic Surgeries: Only deductible if necessary to improve a deformity related to a congenital abnormality, accident, or disease.
- General Health Products: Costs for items that are merely beneficial to general health are not deductible.
Practical Tips:
- Review IRS Publications: Regularly consult IRS Publication 502 to keep updated on what expenses are deductible.
- Consult a Professional: Seek advice from a tax professional if unsure about the eligibility of certain expenses.
Qualification Criteria:
- Clear Medical Necessity: Ensure that the medical reason for the expense is clear and documented by a healthcare professional.
3. Claiming Deductions for Dependents
You can claim medical expenses you pay for your dependents, including your spouse and children, provided they meet certain requirements.
Subtopics:
- Dependent Status: The individual must qualify as your dependent according to IRS rules.
- Paid Expenses: Only expenses directly paid out-of-pocket can be claimed.
Practical Tips:
- Coordinate with Family: If multiple parties provide support, coordinate who will claim the deduction to maximize tax benefits.
- Use Flexible Spending Accounts (FSAs): Utilize FSAs to pay dependent medical expenses with pre-tax dollars.
Qualification Criteria:
- Support Test: Ensure the dependent meets the support test, which includes financial support and relationship criteria.
Conclusion
Maximizing your tax deductions for medical expenses requires an understanding of what qualifies, meticulous record-keeping, and sometimes, strategic planning with tax professionals. This guide aims to help you navigate these complexities with ease.
Legal Disclaimer: This guide is provided for informational purposes only and should not be construed as tax advice. Tax laws and regulations are subject to change, and individual circumstances may vary. Consult with a qualified tax professional or advisor to address your specific tax situation and compliance requirements.
To schedule your consultation, please use my Calendly link.
Best Regards,
Askia Roberts, CPA
RTW Advisors
