Medical Deductions

Uncle Sam allows special deductions for when medical expenses start to add up.

When to itemize. If your loved one was 65 years or older last year (in 2016), they can deduct certain medical costs. The medical costs must total more than 7.5% of adjusted gross income (AGI). So for example, if the AGI is $40,000, any medical expenses over $3,000 can be deducted. For those younger than 65, the medical expenses cost must total more than 10% of the AGI. (In our example, that would mean $4,000 or more.)

Insurance premiums. Your health insurance premiums are a deduction! This includes any money deducted from Social Security to pay for Medicare and payments made for supplemental insurance (“Medi-gap”) and Part D (drug coverage).

Medical expenses not covered by insurance. A lot of things which Medicare does not cover ARE tax deductible. These include: glasses, hearing aids, dentures, vision / hearing checks, and any fees for dental visits and cleanings.

Additional fees or copays.  Deductibles or co-payments for doctor visits, hospitalizations, drugs, etc. can also be deducted. This can include: lab tests, durable medical equipment, ambulance service, etc.

Complementary medicine. Medicare does not cover these services, but the IRS recognizes visits to licensed acupuncturists and chiropractors as a medical expense.

Medical travel.  Have your loved one keep a mileage log. Driving to medical appointments can be deducted at 19 cents per mile (as well as parking and toll fees). If you take a bus, taxi, or train also keep track of these costs. If your loved one is required to travel long distances for medical care, flights and hotel expenses can be deducted.

Home modifications. Did your loved one install a ramp at home for easier entrance? Widen doorways for wheelchair use? If changes do not increase the value of their property, then it is considered a medical expense.

Always check with a professional tax preparer to verify what expenses can be deducted..