This week’s tip is about medical expenses and deductions that some people are not aware of. You may be able to deduct expenses you pay for someone who is not claimed as a dependent. For instance, if you provided over one-half of a parent’s support for the past year, you can include the medical expenses you paid for him or her. You can also deduct some medical expenses paid for, even if you are not ill. In a ruling issued during 2007, the IRS concluded some unreimbursed medical expenses are deductible, even if you incur them when you are not sick. Examples include your annual physicals, body scans, and pregnancy test kits. Medicine you buy without a doctor’s prescription is usually non-deductible; however, items such as crutches, braces, elastic hosiery, and blood sugar tests do qualify as expenses. Home health care items such as walkers, bed and chair lifts, and compression hoses also qualify as expenses. If you, your spouse, or a dependent attend a conference relating to your chronic disease, the registration fee and travel expenses are deductible.
Below is an excerpt from the IRS about medical expenses:
Medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.
Medical care expenses include the insurance premiums you paid for policies that cover medical care or for a qualified long-term care insurance policy covering qualified long-term care services. If you are an employee, medical expenses do not include that portion of your premiums treated as paid by your employer under its sponsored group accident or health policy or qualified long-term care insurance policy. Further, medical expenses do not include the premiums that you paid under your employer-sponsored policy under a premium conversion policy; for example, a federal employee participating in the premium conversion program of the Federal Employee Health Benefits (FEHB) program, may not include the premiums paid for the policy as a medical expense.
If you are self-employed and have a net profit for the year, you may be able to deduct (as an adjustment to income) the premiums you paid on a health insurance policy covering medical care including a qualified long-term care insurance policy covering medical care for yourself and your spouse and dependents. You cannot take this deduction for any month in which you were eligible to participate in any subsidized health plan maintained by your employer, your former employer, your spouse’s employer, or your former spouse’s employer. If you do not claim 100% of your self-employed health insurance deduction, you can include the remaining premiums with your other medical expenses as an itemized deduction on Form 1040, Schedule A.
You may not deduct insurance premiums paid by an employer-sponsored health insurance plan (cafeteria plan) unless the premiums are included in Box 1 of your Form W-2 (PDF).
Deductible medical expenses may include but are not limited to:
You may not deduct funeral or burial expenses, over-the-counter medicines, toothpaste, toiletries, cosmetics, a trip or program for the general improvement of your health, or most cosmetic surgery. You may not deduct amounts paid for nicotine gum and nicotine patches, which do not require a prescription.
You may deduct as an expense any medicine or drug that is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin. A “prescription” means a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state.
You can only include the medical expenses you paid during the year. Your total deductible medical expenses for the year must be reduced by any reimbursement of deductible medical expenses. It makes no difference if you receive the reimbursement or if it is paid directly to the doctor, hospital, or other medical provider.
Here are some points to remember:
Call today, don’t delay! See how this affects you. We can be reached at 602-264-9331 and on all social media under azmoneyguy.