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Medical / Dental Expenses


What are Medical/Dental Expenses?

Medical expenses are the costs of:

  • Medicine and drugs (prescription), including medicare D premiums
  • Doctors
  • Medical and accident insurance
  • Required surgery
  • Transportation to medical facility (Actual Cost or allowance)
  • Physically handicapped costs:
    • Expenses incurred by the physically handicapped for the removal of structural barriers in their residences to accommodate their handicapped condition are treated as medical expenses.

Types of Non-Deductible Medical Expenses

  • Elective Surgery, Elective Cosmetic operations, drugs that are against the law, travel, vitamins, part of Social Security Tax paid for the basic Medicare funerals, cemetery lots, and insurance against loss of earnings due to sickness or accident (Although, cosmetic surgery required due to an accident or deformity can qualify).
  • Life Insurance
  • Capital Expenditures, except those noted above
  • Healthy Club memberships recommended by a doctor for general healthcare
  • Personal Hygiene and other ordinary personal expenses (e.g. toothpaste, toiletries, OTC medicines, bottled water, diaper service, maternity clothes etc.)

How much of the Medical Expenses are deductible?

Qualified medical expenses to the extent they exceed medical insurance reimbursement and 7.5% of the taxpayer’s AGI are deductible.


Insurance Reimbursement

  • Amounts repaid to the taxpayer (or anyone else for the taxpayer) by hospital, health, or accident insurance must reduce otherwise allowable expense (before the 7.5% is applied).
  • Reimbursement of expenses by an employer (or by policies provided by an employer) that exceed the total of medical and dental expenses paid by a taxpayer will be included as part of gross income.
  • Reimbursement of any expense deducted in a prior year will be included as part of gross income in the year received.

Who can deduct Medical and Dental Expenses?

Payments on behalf of the following individuals would qualify:

  • Yourself
  • Spouse
  • Dependent who received over half of his or her support from you

Timing of Deduction

Include as potentially deductible expenses:

  • Paid (cash or check) amounts during the year.
  • Charged amounts during the year (regardless of when paid).
  • Payments made for a deceased spouse(deductible in the year paid, even if it is different from the year the spouse died).

Forms

Publication 502 – Medical & Dental Expenses

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