What Medical Expenses Can Be Deducted on Your Tax Return?

By Dave Barnett, CPA

Unreimbursed medical expenses, medical insurance premiums, and medical related travel are deductible as itemized deductions if they exceed 10 percent of your adjusted gross income. For tax years before 2017, if you or your spouse is 65 or older, the AGI threshold is 7.5 percent. When adding up medical insurance premiums, remember to also include premiums for both medicare and long term care policies.
If you anticipate having medical expenses that exceed the 10 percent or 7.5 percent AGI threshold, you can maximize the write off by bunching those payments into one tax year. Any payments made by December 31, 2016 will count for 2016, as well as any payments charged on a credit card in 2016, even if those charges are billed to you on a January 2017 credit card statement. Expenses for long term care contracts, such as braces for children, could be prepaid to exceed the AGI threshold.

Medical expenses for dependents

Deductible medical expenses include amounts you pay for care of dependents, including a parent. Even if a qualified relative can’t be claimed as a dependent on your return because they either filed a joint return or earned more than $4,000, you still may be allowed to deduct medical expenses you paid for them.

Nursing home care

The cost of medical care received in a nursing home is deductible as well as the costs of food and lodging if the primary reason for being in the nursing home is to receive medical care. In-home nursing services are also deductible.

Self Employed Health Insurance Premiums

Self-employed individuals, including partners, LLC members, and two percent or greater corporation shareholders, are allowed an “above the line” deduction against AGI for medical insurance premiums paid. This provision gives self-employed taxpayers the ability to deduct insurance premiums even if they don’t itemize or have enough medical expenses to reach the AGI threshold.

Deductible or not deductible?

What costs and procedures are not deductible? Insurance premiums paid by your employer, and premiums deducted from your pay on a pretax basis and not included in your taxable W2 income. Payments for fitness clubs or weight loss programs aren’t, unless prescribed by a physician to treat a specific condition. Fees paid for cosmetic surgery, teeth whitening, or hair transplants are also generally not deductible. Other non-deductible costs include non-prescription drugs, medical marijuana, and funeral costs.

Refer to IRS publication 502 for a more detailed list of deductible and non-deductible costs.