How to Claim the Durable Medical Equipment Tax Deduction
Navigate the tax rules for deducting medical equipment. Learn how out-of-pocket costs and income thresholds determine your eligibility for this tax benefit.
The costs of durable medical equipment (DME) can be a significant expense. However, taxpayers who incur these costs for themselves, a spouse, or a dependent may find relief through a medical expense deduction. This tax provision allows for the deduction of payments for equipment prescribed for use in the home, provided certain rules are met.
Defining Deductible Medical Equipment
The Internal Revenue Service (IRS) defines medical expenses as costs for the diagnosis, cure, mitigation, treatment, or prevention of disease. Durable medical equipment falls under this definition and is characterized as equipment that can withstand repeated use. To qualify as DME, the item must serve a medical purpose and not be useful to a person without an illness or injury.
Common examples of equipment the IRS accepts as deductible include:
- Wheelchairs and crutches
- Hospital beds
- Oxygen equipment
- Diagnostic devices, such as blood sugar test kits
- Hearing aids and artificial limbs
- Telephone equipment for hearing or speech disabilities
These items must be prescribed by a physician to address a specific medical condition.
Certain items are not deductible because they are considered beneficial for general health rather than treating a specific condition. The cost of a treadmill purchased for general fitness, for example, does not qualify. Expenses for vitamins, water filters, or maternity clothes are also not deductible as medical expenses.
Qualification Rules for the Deduction
To deduct DME costs, taxpayers must meet requirements from the IRS. The main rule involves the taxpayer’s adjusted gross income (AGI). Medical expenses are only deductible to the extent that they exceed 7.5% of the taxpayer’s AGI, meaning only the amount above this threshold is eligible.
To illustrate, consider a taxpayer with an AGI of $60,000. The 7.5% threshold is $4,500. If this individual incurred $7,000 in total qualified medical expenses, they could only deduct the amount that exceeds the $4,500 floor. The deductible amount would be $2,500 ($7,000 – $4,500).
Another requirement is medical necessity. The equipment must be prescribed by a doctor to treat a specific medical condition, establishing a direct link between the expense and your health needs. Simply purchasing an item that could be used for medical purposes is not sufficient without a documented medical reason for its use, such as a formal prescription.
Calculating and Claiming the Deduction
To calculate the deduction, first total all qualified medical expenses paid during the tax year for yourself, your spouse, and any dependents. This total should include the purchase price of DME and any associated costs for its operation and maintenance, such as batteries or repairs.
From this total, subtract any reimbursements received from insurance or other sources, as the deduction is only available for out-of-pocket costs. The final deductible amount is the portion of your net medical expenses that exceeds the 7.5% AGI threshold.
This final calculated amount is reported on Schedule A (Form 1040), Itemized Deductions. Taxpayers who choose to take the standard deduction cannot claim medical expenses. You must maintain meticulous records to support the deduction, including all receipts and written documentation from a physician confirming the medical necessity of the items.
Special Considerations for Related Expenses
Large-scale home modifications for medical reasons, known as capital expenses, can also be treated as deductible medical expenses. This includes projects like installing ramps, widening doorways, or adding a stairlift. These improvements are deductible to the extent that their cost exceeds any resulting increase in the property’s value. If an improvement does not increase the home’s value, the entire cost may be included.
Taxpayers may use Health Savings Accounts (HSAs) or Flexible Spending Arrangements (FSAs) to pay for medical costs. You cannot claim an itemized deduction for DME expenses that were paid for using funds from these tax-advantaged accounts. This is not permitted by tax law, as it would result in receiving two tax benefits for the same expense.