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Some medical expenses are tax deductible, including payments related to “the diagnosis, cure, mitigation, treatment, or prevention of disease,” according to the IRS.
However, you can only begin to deduct medical expenses once they exceed 7.5% of your adjusted gross income and you must itemize your deductions instead of taking the standard deduction.
Non-qualifying medical expenses include cosmetic surgery, gym memberships or health club dues, diet food, and non-prescription drugs (except for insulin).
This article was reviewed for accuracy and clarity by Lisa Niser, an expert on Personal Finance Insider’s tax review board.
If you were burdened by sizable medical bills or health expenses during 2020, there may be some financial relief available to you come tax season.
Some medical expenses are tax deductible, under two general conditions:
Your qualifying medical expenses for the year exceed 7.5% of your adjusted gross income (AGI), which is your gross income less any above-the-line deductions, AND
You itemize your deductions instead of taking the standard deduction.
If you file jointly with your spouse and/or claim dependents, typically everyone’s medical expenses can be combined.
Tax deductions reduce your taxable income and lower your overall tax liability. While items like student loan interest and IRA contributions can be deducted from your gross income without itemization, medical and dental expenses require that you itemize your deductions on Form 1040, Schedule A.
Remember: Only medical expenses paid out-of-pocket and not reimbursed by your health insurance plan may qualify as tax deductible.
As far as what qualifies as medical? The IRS says “payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.”
Here’s a list of some common qualifying medical expenses (for an exhaustive list, see the IRS website):
Medications that require a prescription, including drugs to alleviate nicotine withdrawal, as well as over-the-counter insulin
Fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners
Inpatient hospital care or residential nursing home care, including the cost of meals and lodging
Inpatient treatment at a center for alcohol or drug addiction or participation in a smoking-cessation program
Cost of infertility treatments, including freezing eggs or sperm and in vitro fertilization
Birth control pills
Cost of a weight-loss program for a specific disease or diseases diagnosed by a physician, including obesity
Cost of laser eye surgery
Cost of reading or prescription eyeglasses, contact lenses, false teeth, hearing aids, crutches, wheelchairs, and for a guide dog or other service animal to assist a person with physical disabilities
Transportation primarily for and essential to medical care, such as fare for a taxi, bus, train, ambulance, gas used for transportation by personal car, or you can deduct 18 cents per mile for medical use of your car
Insurance premiums paid by you (not your employer) for policies that cover medical care, or limited amounts paid for a qualified long-term care insurance policy and Medicare premiums
Fees for treatment at a health institute authorized by a …read more
Source:: Business Insider