Filing taxes and paying medical bills are among the least enjoyed responsibilities of adulthood. But the money you spent on medical expenses can actually take some of the pain out of your taxes when you file.
If you or a dependent family member had a lot of medical and dental expenses in the past year, you might be able to reduce your taxes through health care deductions. The medical deduction covers expenses that exceed 7.5% of your adjusted gross income.
You may be surprised at how many healthcare items can be included in your deductions (check out the IRS list). Figuring out how much and which expenses you can deduct can be confusing and time consuming, but it can also make a big difference to your final tax bill.
We recommend you work with a qualified tax professional for advice on maximizing your deductions. However, this article provides a general overview of healthcare expenses that may be able to decrease your tax burden.
The Basics of Healthcare Deductions
If you pay health care expenses for yourself, a spouse, children, other dependents or qualifying relatives, you may be able to deduct many of these expenses on your tax return.
Medical expenses– including doctor and dentist appointments, prescriptions, eyeglasses, lab fees, therapy, mileage to and from appointments and more– can be deducted if you keep track of all your expenses and make an itemized list.
The list of qualified expenses may be longer than you think – ranging from contact lenses to less obvious items like PPE and infant formula. Only medically necessary expenses that are not reimbursed elsewhere qualify for this deduction.
Health Insurance Costs
Health insurance is a special case. If you are self-employed, you can deduct your health insurance premiums without having to itemize other expenses if you pay for them out of pocket.
For employees who work for an employer but pay for part or all of their health insurance premiums out-of-pocket, these amounts can be itemized. This is also true for COBRA or supplemental health insurance premiums you paid yourself.
Healthcare bills or purchases paid with an HSA or FSA card are not eligible for the deduction, since these funds were deducted from your paycheck pre-tax.
Specialist Care You Can Deduct
When people think of medical bills, hospital and primary care providers may come to mind, while dentists and optometrists are often overlooked.
But necessary dental and optical expenses (even braces and eye surgeries like LASIK) that are not covered by your insurance may also be deductible on your taxes.
Many people may be surprised that the IRS also includes alternative therapies like acupuncture and chiropractic as deductible expenses, especially if you received a doctor’s referral for those treatments.
Lifestyle Support and Chronic Care
People with chronic health conditions can deduct related expenses for medications, supplies, and equipment. For example, diabetics can deduct blood sugar testing kits and insulin.
For those who require home care, activities of daily living (ADL) deductions can be significant, although tricky to calculate.
All expenses associated with service animals of patients with a physical disability qualify for deduction as well. Emotional support animals are not considered service animals.
Behavior modification programs that eliminate major health risks, such as smoking cessation, weight-loss, and inpatient treatment for substance abuse, are all deductible.
Deductions for Reproductive Care
Many aspects of family planning and reproductive care qualify for deduction. That includes birth control, pregnancy tests, legal abortion, sterilization, and fertility treatments.
Certain expenses related to caring for newborns, such as prescription baby formula and lactation supplies, are also deductible.
Accessibility Construction and Equipment
You wouldn’t expect a general contractor to be a deductible medical expense, but if you had to build a wheelchair ramp or modify your home for accessibility, some of those expenses qualify.
Changes that add value to the home are only deductible beyond the added value, and all changes must be justifiably connected to medical need. For example, changing the height of a countertop would qualify, upgrading to marble would not.
In addition, all kinds of medical hardware and adaptive equipment are deductible, whether for temporary or permanent use. From wheelchairs to prosthetics, hearing aids, breast pumps, and even books in Braille, most purchases that make the world more accessible can be claimed.
Training and Travel Deductions
Costs associated with learning how to manage or improve health conditions qualify. This includes programs that teach Braille or lip reading, as well as certain educational expenses for children with learning disabilities, such as tutoring provided by certified specialists.
If you or a dependent had to travel to receive treatment, you may be able to deduct up to $50 per night for lodging, as well as your mileage. You can also deduct registration costs for medical conferences related to your medical condition.
In addition, you can deduct mileage for driving to health-related appointments and destinations. That includes transportation to receive medical treatment or training, to participate in organ transplant, and even to attend support meetings such as Alcoholics Anonymous. The cost of other transportation methods qualifies as well.
You’ll need to keep an itemized list of dates, appointments, and miles traveled to take the deduction.
Should You Itemize Expenses or Not?
When filing taxes, you are eligible to deduct 100% of qualified medical expenses that exceed 7.5% of your adjusted gross income when you itemize your deductions. If your family’s 2022 medical expenses were high and you choose to itemize deductions, this could put you at an advantage.
To benefit from health care deductions, your total itemized deductions —medical expenses, state and local taxes, home mortgage interest and charitable contributions — must be greater than the standard deduction (which in 2022, ranged from $12,950 for a single person to $25,900 for a married couple filing jointly). For most people, taking the standard deduction may be the better choice. View current year standard deduction amount.
If you do itemize your deductions, be sure to include any and all qualified expenses and your mileage. Here’s the IRS list again of what you can claim as deductions.
In Summary
If you or your dependents had a lot of medical expenses in the past year, taking the time to itemize your deductions can make a big difference to your final tax bill.
There are many healthcare items that can be included in your deductions, some that might surprise you. Check out the IRS list to learn which health care deductions may be able to reduce your taxes this year.
Keep in mind that many of these expenses only qualify under certain conditions or with specific restrictions. If you do plan to deduct itemized medical expenses, consult an accountant or tax professional for guidance and advice specific to your circumstances.
This article offers general educational information about the expenses that qualify as health care tax deductions. It is presented as an educational resource and not intended as professional tax advice.