How to Deduct Medical Expenses on Your Tax Return

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When filing your taxes, you want to reduce your taxes as much as possible. You can claim many tax breaks on your tax return, and if you have a lot of medical bills, you may get a tax deduction on them, too.

Understanding what qualifies as a medical expenses deduction depends on whether the services or costs meet the IRS definition. Qualifying expenses must be for diagnosis, prevention, treatment, or cure of diseases or injuries. To claim those costs, you must keep any receipts for them.

The Standard Deduction

When you fill out your tax forms, you must decide whether to use the standard deduction or itemize. For tax year 2024, the standard deduction for singles is $14,600. Married couples filing jointly have a deduction of $29,200. People filing as heads of household have a standard deduction of $21,900.

Seniors 65 or older or blind have a higher standard deduction. The higher amount enables seniors to take even more off their tax bill, helping them meet their financial needs in retirement. Kiplinger says singles that are 65 and older or blind have a standard deduction that is $1,550 higher—for a total of $16,150. Married couples filing jointly who are 65 or older or blind can deduct an extra $3,100 for a total standard deduction of $32,300.

Although you may have other deductions you can add to your list, your itemized deductions need to be higher than the standard deduction to use it. Because the deduction is now quite high, most people use the standard deduction.

Medical Expenses Must Be Greater Than 7.5 Percent of Your AGI

The Internal Revenue Service only allows you to deduct some of your medical costs from your taxes. You can only deduct the amount that exceeds 7.5 percent of your adjusted gross income (AGI). For example, if you had an AGI of $50,000, then only those medical bills totaling more than $3,750 are tax deductible. Even if it is higher than that, all your deductions combined need to be greater than the standardized deduction to claim it.

If you pay state tax, your state may have a lower AGI threshold, which means you may get a larger tax deduction on your state taxes. When a state does not have an income tax, then none of it is tax deductible on the state level.

Lodging to Get Medical Treatment

When you must travel to get medical care, Investopedia says that you can deduct up to $50 per person per night for lodging. Staying at the place of lodging cannot be for recreation, vacation, or personal pleasure, and it cannot be extravagant.

Each mile you must drive for qualified medical care is also tax-deductible. The IRS allows you to claim 21 cents per mile going to and from medical appointments or treatments.

Many Medical Costs Are Deductible

TurboTax lists the many possible medical deductions you can claim. You can claim them on Schedule A, Form 1040. Here are some of them:

• payments you made to doctors, surgeons, dentists, chiropractors, psychologists, psychiatrists, and other medical practitioners
• hospital care
• nursing home care
• prescription drugs and insulin
• dentures, eyeglasses, hearing aids, wheelchairs, crutches, and service animals
• some weight-loss programs
• cost of transportation to and from medical care
• insurance premiums not paid for by an employer, including long-term care (includes Medicare Parts A, B, and D)
• prosthesis
• addiction and quit-smoking programs
• ambulance services
• breast reconstruction
• home modifications for medical equipment
• and more.

Medical Deductions for the Self-Employed

The rules for deducting health insurance premiums are different for the self-employed than the employed. Forbes says that when self-employed individuals pay the entire cost of their health insurance premiums, they can deduct all of it. Because the self-employed medical insurance deduction is an above-the-line deduction, you can deduct it even if you do not itemize.

Some Rules for Claiming Medical Deductions

• You cannot have been reimbursed for those expenses.
• Medical costs must have occurred within the tax year.

You cannot claim:

• cosmetic surgery
• controlled substances (marijuana, laetrile, etc.), even if they are legal in your state
• electrolysis, hair removal, or hair transplant
• health club dues
• health savings accounts
• nutritional supplements
• non-prescription drugs
• surrogacy expenses
• household help
• teeth whitening
• veterinary fees
• funeral expenses
• and more

Medical expenses paid from a flexible spending account (FSA) or health savings account (HSA) are not tax deductible. TurboTax says you cannot deduct those costs because money put into those accounts is already tax-advantaged.

If you forget to claim an expense from a previous year that would have qualified, the IRS says you can use Form 1040-X to amend previous tax forms. You have up to three years to make a back claim.

More Deductions Possible If You File Married Separately

Some situations may make it possible to deduct more if you file married separately. NerdWallet mentions that if your spouse earns less than you do, 7.5 percent of the spouse’s salary is smaller than 7.5 percent of the larger salary. If the medical bills belong to your spouse, filing separately would give you a larger tax deduction than if you file jointly.

The Benefits of a Health Savings Account

One way to save even more money on your taxes is to get a HSA. Although it is not for everyone, it can help you save a lot of money. Before buying an HSA, you need to purchase a high-deductible health policy.

Money put into the account is pretax, enabling you to get an immediate tax deduction. Money withdrawn from the account is tax-free when used for HSA-covered items. The interest-earning account also serves as a retirement fund, letting you withdraw it in retirement penalty-free.

If you have a lot of taxable medical expenses, you may be able to use them to reduce your tax bill. When combined with your other possible tax deductions, you may be able to save a chunk of money if you itemize. Talking to a tax consultant can help you find even more ways to save money.

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