Most of us visit the doctor and/or dentist every year. Depending on one’s life circumstances, some people a lot more than others. Whatever the case, just about everyone will have some medical and dental expenses throughout any given year. For some of us these bills can really add up and be quite a burden. So wouldn’t it be great if there were some kind of tax credit or deduction to help offset all those bills for medical and dental expenses? Well, you’re in luck. You can deduct medical and dental expenses from your income, which can help reduce your tax bill. However, as with most tax policies, this is not a cut and dry issue. There are certain requirements that must be met.
What Does the Law Say About Medical Expense Deductions?
If you’re like most other taxpayers then at some point you’ve probably come across those questions about medical and dental bills when you file your tax return. Perhaps you’ve wondered if you qualify. Perhaps you just figure that it doesn’t apply to you so you skip it. Or maybe you’ve been really excited about the opportunity only to find out that you don’t qualify. There are many different aspects and rules when it comes to deducting these expenses, so let’s take a closer look at the tax laws regarding medical and dental expenses.
Medical & Dental Costs You Can Deduct
First off, what kinds of expenses can be deducted? There are actually quite a few that qualify, including:
- Preventative care
- Medical appliances
- Psychiatric/psychological sessions
The IRS even allows you to deduct additional expenses such as fees for traveling and parking, or even mileage you put on your vehicle to get to and from medical appointments.
Medical Expenses You Cannot Deduct
There are some other medical expenses that the IRS won’t allow, such as:
- Reimbursed medical expenses
- Cosmetic procedure expenses
- Non-prescription drugs
- Medical expenses paid in another year
Now to the biggest question when it comes to medical/dental expenses: just how much can you deduct? That is where things get a little less exciting for many taxpayers. Every year when I get to this section of my tax return I’m always hopeful it will benefit me and save me a little more money. However, when I do the math, we always come up short. On the one hand, it would be nice to get a deduction, but I can’t complain because by not qualifying for the deduction that means we haven’t had a lot of medical expenses. That is a plus in and of itself, but it also means we have been enjoying good health, and who can complain about that?
A Closer Look at the Numbers
So, let’s take a closer look at the numbers. According to the IRS, you can deduct qualified medical/dental expenses that surpass 10 percent of your adjusted gross income for that year. Therefore, if your AGI is $60,000, for example, and you spend $3,000 on qualified medical expenses for the year, then you cannot deduct any of those expenses as they only represent 5 percent of your AGI. However, if you were to have $8,500 in qualified medical expenses for the year then you could deduct the amount that exceeds 10 percent of your AGI. In this case, 10 percent would be $6,000, so you would be eligible for a $2,500 deduction. So depending on your circumstances you could be in for a nice little tax break.
Additional Break for Seniors
There is one other thing to keep in mind, if you are 65 or older. The IRS put in place a temporary exemption back in January of 2103, which lasts through the end of this year. This allows people age 65 and older, as well as their spouses to deduct qualified medical expenses that surpass 7.5 percent of their AGI. So if you turn 65 this year or have already reached that age then you can qualify for this added bonus if your medical expenses exceed 7.5 percent of your AGI. So, if you’ve had to spend more than usual on medical/dental expenses this year then keep detailed records of all your bills. All those extra doctor visits and health-related expenses could save you some decent money come tax time.