The IRS permits deductions for out-of-pocket medical costs that are necessary for the diagnosis, treatment, or prevention of disease. These may include:
• Doctor visits, hospital stays, and surgeries.
• Prescription medications.
• Dental and vision care, including eyeglasses and contact lenses.
• Mental health therapy and counseling.
• Medical equipment (hearing aids, wheelchairs, crutches, etc.).
• Long-term care services.
You can deduct medical expenses only if they exceed 7.5% of your adjusted gross income (AGI). For example:
• If your AGI is $50,000, only expenses above $3,750 can be deducted.
To claim a medical expense deduction, you must itemize deductions using Schedule A (Form 1040) instead of taking the standard deduction.
4. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)
• HSA Contributions: Pre-tax contributions lower taxable income, and withdrawals for medical expenses are tax-free.
• FSA Accounts: Allow tax-free spending on qualifying medical expenses but are often "use-it-or-lose-it" by year-end.
If you travel for medical treatment, you can deduct transportation costs, including:
• Mileage driven for medical visits (standard IRS mileage rate applies).
• Parking fees and tolls.
• Lodging expenses (up to $50 per night) for medical care requiring overnight stays.
Some expenses do not qualify for a deduction, such as:
• Cosmetic procedures (unless medically necessary).
• Over-the-counter medications (unless prescribed).
• Health club memberships.
Final Thoughts: Understanding medical deductions can provide relief from high healthcare costs. Keeping detailed records, tracking eligible expenses, and utilizing HSAs or FSAs can help lower your tax bill. Need help optimizing medical deductions? Our tax professionals can guide you through the process.
