Since tax season is here our Louisville CPA firm will be re-running a series we shared last year on itemized deductions. Over the next few weeks we will focus our attention on helping you understand how you can get the most out of your tax return this year.
Medical & Dental Expenses
If for a taxable year you itemize your deductions on Schedule A you may be able to deduct expenses you paid that year for medical and dental care for yourself your spouse and your dependents. You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income. For years beginning after December 31 2012 you may deduct only the amount by which your total medical expenses exceed 10% of your adjusted gross income. You figure the amount you are allowed to deduct on Form 1040 Schedule A.
IRS Publication 502 Medical and Dental Expenses contains additional information on medical expenses including who will qualify as your dependent for purposes of the deduction and how you figure and report the deduction on your return.
Medical care expenses include payments for the diagnosis cure mitigation treatment or prevention of disease or payments for treatments affecting any structure or function of the body.
Medical care expenses include the insurance premiums you paid for policies that cover medical care or for a qualified long-term care insurance policy covering qualified long-term care services. If you are an employee medical expenses do not include that portion of your premiums paid by your employer under its sponsored group accident or health policy or qualified long-term care insurance policy. Further medical expenses do not include the premiums that you paid under your employer-sponsored policy under a premium conversion policy; for example a federal employee participating in the premium conversion program of the Federal Employee Health Benefits (FEHB) program may not include the premiums paid for the policy as a medical expense.
If you are self-employed and have a net profit for the year you may be able to deduct (as an adjustment to income) the premiums you paid on a health insurance policy covering medical care including a qualified long-term care insurance policy covering medical care including a qualified long-term care insurance policy for yourself and your spouse and dependents. You cannot take this deduction for any month in which you were eligible to participate in any subsidized health plan maintained by your employer your former employer your spouse’s employer or your former spouse’s employer. If you do not claim 100% of your self-employed health insurance deduction you can include the remaining premiJums with your other medical expenses as an itemized deduction on Form 1040 Schedule A. You may not deduct insurance premiums paid by an employer-sponsored health insurance plan (cafeteria plan) unless the premiums are included in Box 1 of your Form W-2.
Deductible medical expenses may include but are not limited to:
- Payments of fees to doctors dentists surgeons chiropractors psychiatrists psychologists and nontraditional medical practitioners
- Payments for in-patient hospital care or nursing home services including the cost of meals and lodging charged by the hospital or nursing home
- Payments for acupuncture treatments or inpatient treatment at a center for alcohol or drug addiction for participation in a smoking-cessation program and for drugs to alleviate nicotine withdrawal that require a prescription
- Payments to participate in a weight-loss program for a specific disease or diseases including obesity diagnosed by a physician but not ordinarily payments for diet food items or the payment of health club dues
- Payments for insulin and payments for drugs that require a prescription
- Payments for admission and transportation to a medical conference relating to a chronic disease that you your spouse or your dependents have (if the costs are primarily for and essential to medical care necessitated medical care). However you may not deduct the costs for meals and lodging while attending the medical conference
- Payments for false teeth reading or prescription eyeglasses or contact lenses hearing aids crutches wheelchairs and for guide dogs for the blind or deaf
- Payments for transportation primarily for and essential to medical care that qualify as medical expenses such as payments of the actual fare for a taxi bus train or ambulance or for medical transportation by personal car the amount of your actual out-of-pocket expenses such as for gas and oil or the amount of the standard mileage rate for medical expenses plus the cost of tolls and parking fees
You may not deduct funeral or burial expenses over-the-counter medicines toothpaste toiletries cosmetics a trip or program for the general improvement of your health or most cosmetic surgery. You may not deduct amounts paid for nicotine gum and nicotine patches which do not require a prescription
You can only include the medical expenses you paid during the year. Your total deductible medical expenses for the year must be reduced by any reimbursement of deductible medical expenses. It makes no difference if you receive the reimbursement or if it is paid directly to the doctor hospital or other medical provider.
Keep following along as Lindemeyer CPA shares more tax tips in the coming weeks.