How to Claim Medical Expenses on Taxes Step by Step

Tax season often presents a maze of deductions and credits, with medical expenses offering a potentially valuable yet complex opportunity for reducing taxable income. Understanding how to claim these expenses can provide significant financial relief for those with substantial healthcare costs.

Qualifying Medical Costs

Determining which medical costs qualify for tax deductions requires clarity on what the IRS considers deductible. Expenses must primarily address a physical or mental disability or illness. These include payments for diagnosis, treatment, or disease prevention, as well as treatments affecting any part or function of the body. Common qualifying expenses include surgeries, doctor visits, and prescription medications. Elective cosmetic procedures generally do not qualify unless they address a deformity caused by a congenital abnormality, injury, or disease.

Some non-traditional expenses may also qualify, such as acupuncture, chiropractic services, and weight-loss programs prescribed by a physician to treat conditions like obesity or hypertension. Transportation costs to and from medical appointments, including mileage on personal vehicles, are deductible. For 2024, the standard mileage rate for medical purposes is 20 cents per mile.

Income Threshold Considerations

The ability to deduct medical expenses depends on your adjusted gross income (AGI). For 2024, only the portion of medical expenses exceeding 7.5% of your AGI is deductible. For example, if your AGI is $50,000, only medical expenses above $3,750 are deductible.

Timing your medical expenses strategically can maximize deductions. If substantial medical costs are anticipated, grouping these expenses within a single tax year may help exceed the 7.5% threshold. Scheduling elective surgeries or purchasing medical equipment in the same year can increase the deductible amount.

Documentation Requirements

Proper records are essential for claiming medical deductions. The IRS requires receipts, invoices, and statements from healthcare providers to substantiate claims. These documents should clearly outline the amounts paid and confirm that the expenses were incurred within the tax year being filed.

Organizing records systematically by type and date simplifies the process of calculating deductions. For instance, using a spreadsheet to log expenses alongside receipt numbers, dates, and provider names can help. Digital documentation is also accepted, and scanning receipts for electronic storage ensures records are preserved. Accounting software integrated with digital files can further streamline this process.

Dealing With Reimbursements

Reimbursements affect the deductibility of medical expenses. Any amounts reimbursed by insurance providers or health savings accounts (HSAs) must be subtracted from total medical expenses before calculating deductions. The IRS prohibits claiming both the reimbursement and the deduction.

For example, if you incur $10,000 in medical expenses but receive $3,000 in reimbursements, only $7,000 is deductible. Keeping detailed records of both expenses and reimbursements ensures compliance with IRS rules.

If a reimbursement is received in a different tax year than when the expense was incurred, it adds complexity. In such cases, the reimbursed amount must be reported as income in the year it is received if it was previously deducted.

Itemizing on Tax Forms

Claiming medical expenses requires itemizing deductions rather than taking the standard deduction. This decision depends on whether total itemized deductions, including medical expenses, exceed the standard deduction amount for your filing status. For 2024, the standard deduction is $13,850 for single filers and $27,700 for married couples filing jointly.

To itemize, complete Schedule A of Form 1040, detailing all allowable deductions, including medical expenses. Enter total qualifying medical expenses and subtract 7.5% of your AGI to determine the deductible portion. Accuracy is critical, as mistakes can lead to IRS scrutiny. Tax preparation software can help reduce errors, but verifying entries against your records is still necessary.

For those who itemize, combining medical expenses with other deductions, such as state and local taxes or mortgage interest, can increase the benefits. Consulting a tax professional can help determine whether itemizing is the best option for your financial situation.