Take the Mystery out
of Medical Expenses
Medical
expenses are deductible as itemized deductions on
Schedule A. However, the deductible portion must be
more than 7 ½ percent of your (AGI) Adjusted Gross
Income. You may not think you have enough expenses
to qualify for this. If you do not keep accurate
records throughout the year of your out-of-pocket
expenses, you may be loosing out on a deduction that
you may be eligible for.
Under the
Internal Revenue Code Section 213 © (1) a tax payer
may deduct amounts paid for the “diagnosis, cure,
mitigation, treatment or prevention or disease, or
for the purpose of affecting any structure or
function of the body.”
What
if you do not have enough expenses this year to be
able to use this medical deduction? Many people do
not know this; you may bunch your deductible
expenses every other year. Many times this will
allow taxpayers to take advantage of this deduction
at least every other year.
Here is a
list of deductible medical expenses you may incur:
Ø
Just about any professional medical
help. Doctor, dentist, therapist, hospital care,
chiropractors, and psychiatrists.
Ø
Cosmetic surgery. It must be
medically necessary to improve a deformity or
related to an accident or trauma or disease.
Optional surgery such as; Face-lifts, breast
implants, hair removal, etc. are generally not
deductible.
Ø
Prescription medicine. Any
prescription except for marijuana is deductible.
IRS code will not allow a deduction for anything
that is illegal under the federal Controlled
Substance Act.
Ø
Prescription supplies may also be
deducted if prescribed my a doctor such as;
·
Birth Control Pills Prescribed by your
Doctor
·
Cost of Fertility enhancement
procedures
·
Cost of Vasectomy
·
Expenses of an Organ Donor
·
Laser Eye Surgery to promote the
correct function of the eye
·
Cost of Lead-Based Paint Removal (see
publication 502)
·
Reclining chair
·
Bed
·
Therapeutic swimming
·
Wig for hair loss
·
Weight-loss program
·
Food services for a special diet
·
Eyeglasses/Contact Lenses and cleaning
solution for this
·
Hearing Aids-batteries for this
·
Dentures-false teeth
·
Wheel Chairs
·
Elastic Stockings
·
Crutches
·
Oxygen and Equipment
·
Close-Captioning Equipment
·
Guide Dogs and other animals for the
blind
·
Nursing Services
·
Blood Testing Equipment
·
Artificial Limbs
·
Repairs for any Prescription Equipment
·
Stop-smoking programs
·
Treatment at a drug or alcohol center
·
Special school or home for mentally or
physically disabled persons
Ø
Travels to and from medical
appointments are deductible. If you use your car,
you can deduct .13 cents per mile in 2002 in lieu of
gas and oil plus any parking fees and tolls. You
can deduct the actual expense if you take a taxi,
bus, train, airplane, or ambulance. If you must stay
at a hotel overnight while away from home, this is
also deductible at $50 per person. Meals are not
deductible for this. Overnight expenses of a person
accompanying a patient, are also deductible, up to
$50 per night if that person is essential to the
patients care. Make sure you have records and keep
them. Keep track of mileage, dates and the reason
for the travel.
Ø
Health Insurance premiums that you pay
or are taken out of your paycheck automatically are
deductible. Remember, only the portion that you
actually pay. This may also include a dental
plan. However, it does not include
disability insurance (this is not deductible). If
you are self-employed, you may deduct 60% of
the cost of health insurance premiums. You may
deduct this on Schedule 1040 near the bottom of the
first page for instance. The amount that you cannot
deduct on Schedule 1040 can be deducted on Schedule
A as an itemized medical expense.
Ø
Long-term care insurance premiums are
limited based on the taxpayer’s age. Each spouse or
person is treated separately. This is determined
based on the person’s age;
·
40 or less $230
·
41-50 $430
·
51-60 $860
·
61-70 $2,290
·
71 and over $2,860
Ø
Nursing Home expenses are fully
deductible as long as the person is in the facility
for medical reasons. A one-time payment for a
lifetime of medical care in a nursing home is
deductible in the year that it is paid-even if the
services will be provided over a longer period of
time.
Reminder.
In order to be able to deduct a medical expense on
Schedule A, it must be prescribed by a doctor.
Therefore, things like bottled water, vitamins,
diaper services, health club, household help,
funeral, life insurance, maternity clothes, cosmetic
surgery, toothpaste, and toiletries are not
covered. This is just a short list meant to give
you an example.
You can
include medical expenses that you pay on behalf of
yourself. Also, you may be able to include other
individuals. In most cases, the person must either
have been married to you or your dependent at the
time of the medical treatment or the payment of the
treatment.
-
Spouse.
-
Dependent. To qualify as dependent, this person
must have lived with you for the entire year as a
member of your household, U.S. Citizen or resident
of Canada or Mexico, you provided over half of the
support for that person during the year.
-
Adopted Child.
- Child
of Divorced or Separated Parents.
-
Support Claimed Under a Multiple Support
Agreement.
-
Decendent.
Clients
have always wanted a more thorough list of what
Medical Expenses are. Therefore, I hope this helps
clear up some of the questions. Medical expenses
can make a big difference in the amount of tax you
pay if you keep good records and know what the rules
are.
If you
would like more information on claiming medical
expenses, you can also get IRS Publication
502-Medical and Dental Expenses. Available at:
www.irs.gov
Reference:
Internal
Revenue Service.
www.irs.gov
Internal
Revenue Service (2001). Your Federal Income Tax.
2001 Tax Guide.
