Introduction
Tax season is upon us and for many of us, filing our taxes can be a stressful experience. But, with the help of medical expense deductions, you can potentially save money on your taxes. In 2023, the Internal Revenue Service (IRS) continues to allow taxpayers to deduct qualified medical expenses from their taxable income.
In this guide, you’ll learn what a medical expense deduction is, what qualifies as a medical expense and how to claim a deduction on your taxes. We’ll also provide some additional tax tips and resources to ensure you’re getting the most out of your medical expense deduction.
What is a Medical Expense Deduction?
The medical expense deduction is an IRS-allowed deduction that reduces your taxable income. This deduction is designed to help those with high medical bills reduce the amount of money they owe in taxes. To qualify for the deduction, you must itemize your deductions on your tax return and have medical expenses that total more than 7.5% of your adjusted gross income.
In 2023, the medical expense deduction has been extended to include long-term care expenses. This includes premiums for qualified long-term care insurance policies, as well as any other costs related to the care of chronically ill or disabled family members.
What Qualifies as a Medical Expense?
Medical expenses are any costs associated with the diagnosis, cure, mitigation, treatment or prevention of a medical condition. This can include doctor visits, prescription medications, medical equipment, and even some home improvements. Additionally, the IRS allows taxpayers to deduct the cost of certain over-the-counter medications, as well as health insurance premiums.
The IRS has a full list of qualified medical expenses, so it’s important to familiarize yourself with what qualifies and what doesn’t. For example, cosmetic procedures, such as plastic surgery, are not eligible for the deduction. Additionally, some insurance premiums, such as those for vision and dental care, are not deductible.
How to Claim the Deduction
When claiming the medical expense deduction, you must itemize your deductions on Schedule A of your tax return. This is the form you use to report your medical expenses for the year. On Schedule A, you’ll need to list the total amount of all your medical expenses for the year. This includes doctor visits, hospital stays, medications, and any other medical costs.
Keep in mind, you can only deduct the portion of your medical expenses that exceed 7.5% of your adjusted gross income. So, if your adjusted gross income is $50,000, you can only deduct the portion of your medical expenses that exceed $3,750. The IRS has a worksheet in Publication 502 that can help you calculate your deduction.
Additional Tax Tips
To maximize your medical expense deduction, keep all your medical bills and receipts. This includes doctor visits, prescriptions, and any other medical-related expenses. Additionally, you should keep records of all payments you make, including insurance premiums. These records will help you accurately report your expenses on your tax return.
The IRS also allows taxpayers to deduct the cost of certain home improvements, such as installing ramps or widening doorways, if they are medically necessary. Additionally, if you’re self-employed and have health insurance, you can deduct your premiums on your taxes. To learn more about self-employed health insurance deductions, check out Publication 535.
Conclusion
The medical expense deduction can help you save money on your taxes if you have high medical bills. To qualify for the deduction, you must itemize your deductions and your medical expenses must exceed 7.5% of your adjusted gross income. In 2023, the deduction has been extended to include long-term care expenses.
To maximize your deduction, make sure to keep all your medical bills and receipts. Additionally, you should familiarize yourself with the list of qualified medical expenses. For more information on the medical expense deduction and other related tax topics, check out the IRS website.
