Medical expenses add up quickly, especially if the costs aren’t covered and reimbursed through your health insurance. If you or your dependents have racked up medical expenses, you might have the opportunity to claim them as a deduction on your next tax return.
To ensure you’re making the most of the medical expense deduction, AA Tax & Accounting Services is here to breakdown how it works.
Are medical costs tax-deductible?
Suppose you or a dependent have a high volume of medical expenses. In that case, you’ll be pleased to know that the Internal Revenue Service allows you to deduct unreimbursed medical expenses from your tax return.
However, there are stipulations to the types of medical expenses that can be counted towards your tax deductions.
When filing your tax return, you can deduct qualified medical expenses if they equal more than 7.5% of the previous year’s adjusted gross income.
For instance, if your adjusted gross income is $75,000, any amount exceeding the first $5,625 of medical expenses can be deducted. This means that if your medical expenses totaled $15,000, you would be eligible to deduct $9,375.
Medical expenses eligible for tax deductions
To prepare you for the upcoming tax season, we’ve put together a list of qualified medical expenses that can be deducted from your tax return:
- Acupuncture or other forms of alternative treatments
- Addiction treatment, which includes food and lodging at a rehabilitation center
- Adaptive equipment including wheelchairs, shower seats, and other disability accommodations
- Birth control pills
- Blood-testing kits and strips for diabetes
- Breast pumps and pumping equipment
- Chiropractic services for medical purposes
- Diet food and supplements when prescribed by a doctor to alleviate a specific medical condition
- Eye exams and, if applicable, contact lenses and prescription glasses
- False teeth
- Hearing aids or other hearing equipment
- Home improvements to increase accessibility due to a medical disability
- Household help for nursing care services
- Lodging when traveling out-of-town for a medical treatment
- Organ transplants
- Prosthetic limbs
- Psychiatric care
- Reproduction costs covering abortions, vasectomies, and fertility treatments
- Service animals meals, training, and veterinarian expenses
- Sex-reassignment surgery and hormone therapy to treat gender identity disorder (GID)
- Special education
- Programs supporting physical or mental conditions such as dyslexia or ADHD
- Public transportation costs to and from medical visits
- Wigs for those with a medical condition such as cancer or alopecia
You must track all your medical costs throughout the year, so come tax season, you can easily determine if you need the requirements to deduct your medical expenses from your tax return. Hold onto all copies of receipts and make a note of which expenses haven’t been reimbursed so you can reduce your tax bill with little headaches.
Additional rules to be aware of
If you’re planning to deduct medical expenses from your tax bill, here are two additional rules to be aware of:
1. You are only allowed to include medical expenses that were paid during the tax year.
2. If you were reimbursed for any medical expense through your insurance, that bill cannot be included in your tax deduction.
How to claim the medical tax deduction
Now that you’re aware of what types of medical expenses can be deducted from your tax bill, you must set yourself up for success come tax season.
You will be required to itemize your deductions, which is why it’s helpful to hold onto and organize all receipts you receive throughout the year.
Tax consulting services in Cedar City, Utah
If you have a high amount of medical expenses, AA Tax & Accounting Services can help you better understand how to maximize your medical expense deduction to save you the most money on your upcoming tax bill.
No one should go into tax season with their questions unanswered. Our team of tax consultants has the experience navigating the most effective strategies for maximizing their deductions and tax credits with our tax consulting services.
The AA Tax & Accounting Services team can help you execute the right tax strategies to save you money on your medical expenses. Contact us to schedule an appointment.