Paying out of pocket for medical, dental, or other health-related expenses can quickly add up. Fortunately, the IRS offers some relief: many unreimbursed medical expenses are tax deductible when they exceed 7.5% of your adjusted gross income (AGI). This guide will help you understand which medical expenses are tax deductible, how to claim them, and how O1ne Mortgage can assist you with your financial needs.

What Medical Expenses Are Tax Deductible?

Medical expenses are only tax deductible when you itemize deductions on your tax return. If you take the standard deduction, you cannot deduct medical expenses separately. According to IRS Publication 502, some common deductible medical expenses include:

• Fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners
• Inpatient hospital care
• Residential nursing home care when medical care is the reason for care
• Acupuncture treatments
• Inpatient treatment for drug or alcohol addiction
• Smoking-cessation programs and prescription drugs for nicotine withdrawal
• Weight-loss programs for specific diseases diagnosed by a physician
• Health club memberships if part of obesity treatment
• Prescription drugs and medicines, including insulin
• Medical aids such as false teeth, prescription eyeglasses, contact lenses, or hearing aids
• Service animals for visually impaired, hearing disabled, or physically disabled persons
• Crutches and wheelchairs
• Transportation costs for receiving qualifying medical care
• Insurance premiums for medical care and limited amounts for long-term care

What Medical Expenses Are Not Tax Deductible?

Not all health-related expenses are deductible. Non-deductible expenses include:

• Insurance premiums paid through an employer-sponsored health plan
• Funeral or burial expenses
• Nonprescription medicines, toiletries, toothpaste, or cosmetics
• Trips taken with the general goal of improving health
• Cosmetic surgery
• Nonprescription nicotine patches or gum

Additionally, medical expenses paid through insurance or a health savings account (HSA), flexible spending account (FSA), Archer medical savings account (MSA), or health reimbursement arrangement (HRA) are not deductible.

What Percentage of Medical Expenses Are Tax Deductible?

All qualifying medical expenses are tax deductible, but the deduction is limited based on a percentage of your AGI. Qualifying medical expenses that are less than 7.5% of your AGI are not deductible; eligible medical expenses that exceed 7.5% of your AGI are.

For example, if your AGI is $80,000, the first $6,000 (7.5% of $80,000) of your qualifying medical expenses are not deductible. However, if your total qualifying medical expenses for the year are $10,000 and you itemize deductions on your tax return, you can deduct the remaining $4,000. If you’re in the 24% tax bracket, a $4,000 deduction saves you roughly $960 in taxes.

How to Deduct Medical Expenses

To claim a deduction for medical expenses on your federal tax return, you’ll need Schedule A (Form 1040). Follow these steps to claim your deduction:

1. Total up your qualified medical expenses and premiums for the year. Keep receipts and payment records with your tax files.
2. Include any out-of-pocket medical insurance premiums you’ve paid. If you claimed the self-employment health insurance deduction on Schedule 1 (Form 1040), do not include the amount on line 17 in your medical deduction.
3. Subtract any reimbursements paid to you. Don’t include payments made from an HSA, FSA, or Archer MSA.
4. Report your total medical expenses on line one of Schedule A. For more details on completing the form, see Instructions for Schedule A.

You may also want to claim other itemized deductions available to you, such as deductions for home mortgage interest, state and local taxes, capital losses, and charity donations.

Frequently Asked Questions

Whose Medical Expenses Can I Deduct?

You can deduct medical expenses you paid for yourself, your spouse, dependents, and your children who are claimed as dependents on another person’s tax return.

Are Medical Expenses Paid With an HSA Tax Deductible?

No, medical expenses paid with an HSA are not tax deductible.

When Can I Claim Medical Expenses on My Taxes?

You can claim medical expenses on your taxes for the year in which you paid them.

The Bottom Line

Though not everyone with medical expenses will qualify, deducting medical, dental, and other health-related expenses can help reduce your federal tax bill if you do. If you think you may have enough eligible medical expenses to claim the deduction this year (or any year), make sure to track your expenses and save receipts throughout the year so you’ll be ready to go at tax time.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team of experts is here to help you navigate your financial journey and achieve your homeownership dreams.