- Some medical expenses are tax deductible, including payments related to “the diagnosis, cure, mitigation, treatment, or prevention of disease,” according to the IRS.
- However, you can only begin to deduct medical expenses once they exceed 7.5% of your adjusted gross income (AGI) and you must itemize your deductions instead of taking the standard deduction.
- For example, if your AGI — your gross income less any above-the-line deductions — is $60,000, the first $4,500 in medical expenses are not deductible.
- Non-qualifying medical expenses include cosmetic surgery, gym memberships or health club dues, diet food, and non-prescription drugs (except for insulin).
- This post has been reviewed for accuracy by Thomas C. Corley, CPA.
- See Business Insider’s picks for the best tax software »
If you were burdened by sizable medical bills or health expenses during 2019, there may be some financial relief available to you come tax season.
Some medical expenses are tax deductible, under two general conditions:
1. Your qualifying medical expenses for the year exceed 7.5% of your adjusted gross income (AGI), which is your gross income less any above-the-line deductions
2. You itemize your deductions instead of taking the standard deduction
If you file jointly with your spouse and/or claim dependents, typically everyone’s medical expenses can be combined.
Tax deductions reduce your taxable income and lower your overall tax liability. While some deductions, like student loan interest and IRA contributions, can be deducted from your gross income without itemization, medical and dental expenses require that you itemize your deductions on Form 1040, Schedule A.
Only medical expenses that were paid out-of-pocket and not reimbursed by your health insurance plan qualify as tax deductible.
As far as what qualifies as “medical”? The IRS says “payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.”
Here’s a list of some common qualifying medical expenses (for an exhaustive list, see the IRS website):
- Medications that require a prescription, including drugs to alleviate nicotine withdrawal, as well as over-the-counter insulin
- Fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners
- Inpatient hospital care or residential nursing home care, including the cost of meals and lodging
- Inpatient treatment at a center for alcohol or drug addiction or participation in a smoking-cessation program
- Cost of infertility treatments, including freezing eggs or sperm and in vitro fertilization
- Birth control pills
- Cost of a weight-loss program for a specific disease or diseases diagnosed by a physician, including obesity
- Cost of laser eye surgery
- Cost of reading or prescription eyeglasses, contact lenses, false teeth, hearing aids, crutches, wheelchairs, and for a guide dog or other service animal to assist a person with physical disabilities
- Transportation primarily for and essential to medical care, such as fare for a taxi, bus, train, ambulance, gas used for transportation by personal car, or you can deduct 18 cents per mile for medical use of your car
- Insurance premiums paid by you (not your employer) for policies that cover medical care, or limited amounts paid for a qualified long-term care insurance policy and Medicare premiums
- Fees for treatment at a health institute authorized by a physician to alleviate a physical or mental disability or illness
- Cost of equipment installed in a home or improvements made to a home to accommodate a disability to the extent that they do not increase the value of the home
Non-qualifying medical expenses include cosmetic surgery, gym memberships or health club dues, diet food, and non-prescription drugs (except for insulin).
If you’re self-employed and earned a profit during the tax year, you may be able to deduct premiums paid for medical, dental, or long-term care insurance for yourself, spouse, and any dependents, up to the amount of your net profit. Unlike the standard medical expense deduction, you don’t need to itemize to take advantage — it’s an adjustment to your gross income.
If you aren’t self-employed and review the IRS list of qualified medical expenses and determine that what you paid for medical expenses throughout the year exceeds 7.5% of your AGI, you should then compare the amount over that threshold — i.e. the amount you would itemize — to your standard deduction to decide which will result in the greatest tax liability reduction.
For the 2019 tax year, the standard deduction is $12,200 for single filers, $18,350 for heads of household, and $24,400 for married taxpayers filing jointly.
For example, let’s say your AGI for 2019 is $60,000 and you had medical expenses totaling $12,000. The first $4,500 in medical expenses are not deductible due to the 7.5% of AGI threshold. With no other itemization, you would only reduce your taxable income by $7,500. If you claimed the standard deduction instead, you would reduce your taxable income by $12,200.
If you file your taxes online through a service like H&R Block or TurboTax, it will usually ask whether you had excessive medical expenses throughout the year and guide you through itemization or even help you decide whether it’s worth itemizing at all. If you’re still unsure about what qualifies or want help with your specific situation, consult a tax professional.
Editor’s note: This story has been updated to reflect the federal government’s spending bill that passed in December 2019, which extends the medical expenses deduction threshold of 7.5% of AGI through tax year 2019, instead of increasing it to 10%.
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