Medical deductions are difficult to deduct on a tax return. Many save receipts for co-pays and insurance premiums only to find out that they don’t count on their tax return at the end of the year.
Medical expenses generally include fees paid to doctors, dentists, psychiatrists etc., for medical expenses. This includes hospital services, long term care, nursing services, lab fees and prescription drugs. Transportation to medical appointments via taxi, bus, train or ambulance can also be deducted. Mileage rate for a personal vehicle can be calculated at $.19 cent a mile for 2011. There are other deductible expenses such as prescription eyeglasses, hearing aids, wheel chairs, and guide dogs for the deaf and blind. Items that cannot be deducted include funeral or burial expenses, over the counter medications, or cosmetic surgery or non-prescription nicotine patches or gum. For a complete list of valid deductions, see Publication 502 on the IRS website.
These are pretty common expenses for the average taxpayer yet few can take the deduction because the medical expenses have to exceed 7.5% of the adjusted gross income. Here is an example of how the deduction works:
A taxpayer has income of $100,000 and medical expenses that total $8500. The first $7500 of medical expenses paid is not deductible. Any amount over $7500 is deductible as a medical expense on a Schedule A. The taxpayer can deduct $1000 of medical expenses. Assume the taxpayer has income of $50,000 and expenses of $3500. They would not get the medical deduction because the first $3,750 or 7.5% of adjusted gross income is not deductible.
Medical deductions must be paid during the current tax year, for the taxpayer, spouse and dependents. Check publication 502 to see who qualifies as a dependent. Any medical expenses claimed must be reduced by any reimbursement paid to the taxpayer, hospital or doctor.
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