Medical Expenses: What's Deductible And What's Not?

May is National Health Awareness & Observances month. Here are some of the special interests and concerns Included in the observances:

Multiple Sclerosis, Osteoporosis Awareness, Stroke Awareness, Melanoma/Skin Cancer Detection and Prevention, Arthritis, Mental Health, Asthma and Allergy Awareness, High Blood Pressure Education, Better Hearing, Lupus Awareness, Cancer Research, and many more. 

See the web page for the National Health Information Center for May at THIS LINK.

The Quality of our Nation’s Health is a continuous issue, especially of late.  While we don’t know what the future will bring in terms of Congressional legislation, we do know that even the IRS is interested in your health—to a certain extent.

That is, depending on a number of factors, the IRS will not tax you on some of what you spend for health care.  As a general idea, if your family has substantial costs to maintain or improve your physical and mental well-being, a portion can be deducted from your income.

The IRS provides “standard deductions” to lower your taxable income, and if your medical expenses – among other factors – are significant and more than the standard deduction, they can be listed on the “Itemized Deductions” schedule of the tax return.  For years, this has been called the Schedule A-Itemized Deductions form.

The first four line items on Schedule A deal with medical and dental expenses – note that you have to deduct a portion before the amount becomes part of the total itemized deductions.  Currently, you need to multiply your “adjusted gross income” by 7.5% (.075) and then subtract that from the total medical and dental expenses you entered (on line 1).

What is Included? In short, what are “Medical Expenses”? According to the IRS Publication 502:

• Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.
• Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.
• Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract.
  

Not everything can be included – for example, although vitamins are generally considered quite helpful in maintaining good health, the IRS does not include them on the list of covered expenses – unless a physician has specifically prescribed them! IRS Publication 502  includes detailed information.

When you come to visit your PRO-TAX professional next year, be sure to bring along all the records of the money you spent on health-care related items – this means that starting last January 1, you should be keeping  track of what you’ve spent for caring for you and your family’s health.  In fact, contact your local PRO-TAX office and ask for a special handy tool which will make it easy to keep track of your medical (and other) deductible expenses.

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