Yes, You May Be Able to Deduct Some Medical Expenses
Medical expenses can hit anyone’s budget hard, and can be especially impactful to retirees. The good news is that, yes, you can claim a deduction for unreimbursed medical expenses on your federal income tax return. Since this deduction can reduce the taxes you owe, take the time to carefully review the following information.
What are unreimbursed medical expenses? In order to claim a medical expense as a tax deduction, you must ensure that you’re claiming the correct expenditures. You can only deduct expenses that were unreimbursed, meaning that your healthcare plan did not cover them or reimburse you for the out-of-pocket expense. Second, you can only claim medical expenses that fit certain parameters, such as:
- Out-of-pocket spending on surgeries, treatment, or preventive care
- Dental care, including dentures
- Vision care, including eyeglasses or contact lenses
- Hearing exams and hearing aids
- Payments for prescription medications
- Payment for insulin
- Travel expenses when you must travel to receive medical care, such as mileage, bus fare, parking and toll fees, etc
Which medical expenses cannot be claimed as tax deductions? You can’t claim amounts that you paid out of pocket, but were later reimbursed by your healthcare plan. You also cannot claim items like nonprescription medications (except insulin), vitamins and supplements, diet foods, nonprescription nicotine products, or health club memberships.
Are Covid-related expenses tax deductible? Many healthcare plan administrators pledged to cover all Covid-related expenses at 100 percent. But if your plan wasn’t one of them, yes you can claim any and all expenses related to your Covid treatment.
How do I claim the medical expenses tax deduction? There are two things you need to know, regarding the medical expenses deduction. First, you must file an itemized return, rather than taking the standard deduction. File IRS Form 1040 and attach Schedule A to list all of your deductions. Second, only the medical expenses which exceed 7.5 percent of your adjusted gross income will be deducted.
Due to both of these rules, some people might not benefit from itemizing their medical expenses. Consult with your tax professional to determine whether you should itemize your expenses and claim the medical expenses tax deduction, or if taking the standard deduction will work better for your situation.