IRS Publication 502: Medical and Dental Expenses

The ability to deduct certain health-related costs on your federal income tax return can provide financial relief. The Internal Revenue Service (IRS) provides the specific rules for this benefit in Publication 502, Medical and Dental Expenses. This deduction allows taxpayers who itemize to lower their taxable income, but it is not available for every health-related purchase.

Defining a Qualifying Medical Expense

The IRS defines qualifying medical expenses as the costs for the “diagnosis, cure, mitigation, treatment, or prevention of disease.” This also includes payments for treatments affecting any structure or function of the body. The primary purpose of the expense must be to alleviate or prevent a physical or mental defect or illness. An expense that is merely beneficial to general health, such as vitamins or a gym membership, does not meet this standard.

You can include medical expenses you pay for yourself, your spouse, and all dependents you claim on your tax return. A person can also be considered a “dependent for medical purposes” even if you cannot claim them as a standard dependent. This occurs if the individual meets all dependency tests except for the gross income test or the requirement that they did not file a joint return.

To be eligible, the individual must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. For example, if you pay a hospital bill in the current year for services your dependent received in a prior year when they also qualified as your dependent, you can include that expense.

Common Deductible Medical Expenses

The range of deductible medical expenses is broad, covering payments to various healthcare professionals and for numerous types of treatment. Costs for services rendered by doctors, surgeons, dentists, chiropractors, psychiatrists, and psychologists are all includable. This extends to non-traditional practitioners as well, as long as their services are for the treatment of a specific medical condition.

Hospital and institutional care costs are a significant category of deductible expenses. This includes payments for inpatient care at a hospital or a similar facility, along with the costs of meals and lodging provided during the stay. For long-term care facilities like nursing homes, costs are deductible if the primary reason for the person’s presence is to receive medical care. If the individual is in the home for personal reasons, only the cost of direct medical care is deductible.

Other common deductible expenses include:

• The cost of prescription medications and insulin. Over-the-counter drugs are not deductible.
• Medical equipment, supplies, and diagnostic devices such as eyeglasses, contact lenses, hearing aids, crutches, and wheelchairs.
• Transportation costs primarily for medical care, including the fare for a taxi, bus, or ambulance. If using your own vehicle, you can deduct a standard medical mileage rate, which is 21 cents per mile for 2024, plus tolls and parking.
• Lodging expenses up to $50 per night for each person while away from home for medical care. The lodging must be essential to the care, which must be provided by a physician in a licensed hospital or equivalent facility.
• Premiums you pay for health, dental, and qualifying long-term care insurance. You cannot deduct premiums paid by an employer or with pre-tax funds.
• The cost of buying and maintaining a guide dog or other service animal to assist a visually, hearing, or otherwise physically disabled person.
• Amounts paid for home improvements, such as adding ramps or modifying bathrooms, if their main purpose is medical care. Any increase in the value of your home from the improvement must be subtracted from the cost.

Specifically Non-Deductible Items

While many expenses are allowed, IRS Publication 502 is clear about items that cannot be deducted. A primary category of non-deductible expenses is cosmetic surgery. Procedures such as face-lifts or hair transplants are not deductible because they do not treat a disease or deformity. An exception exists if the surgery is necessary to improve a deformity from a congenital abnormality, an injury, or a disfiguring disease.

Other non-deductible expenses include:

• Expenses related to general health and wellness, such as the cost of vitamins, nutritional supplements, and health club memberships.
• A weight-loss program, unless it is a treatment for a specific disease diagnosed by a physician, such as obesity or hypertension.
• Personal convenience or family-related items, such as maternity clothes or diaper services, unless they are needed to relieve the effects of a particular disease.
• Funeral, burial, or cremation expenses.

Calculating Your Deduction Amount

To determine your medical expense deduction, you must first sum up all qualifying medical and dental expenses you paid during the year. From this total, you must subtract any reimbursements you received from sources like insurance companies, health savings accounts (HSAs), or flexible spending arrangements (FSAs). The goal is to only deduct out-of-pocket expenses.

The medical expense deduction is subject to a limitation based on your Adjusted Gross Income (AGI), which is found on your Form 1040. You can only deduct the amount of your medical expenses that exceeds 7.5% of your AGI. To find this threshold, you multiply your AGI by 0.075.

Your actual deductible amount is your total unreimbursed medical expenses minus the 7.5% AGI threshold. For example, if your AGI is $60,000, your threshold is $4,500. If you had $8,000 in unreimbursed medical expenses, you could deduct $3,500. If your total expenses were less than the threshold, you cannot claim a deduction.

Required Documentation and Recordkeeping

Although you do not send medical receipts with your tax return, maintaining thorough records is a requirement. If the IRS selects your return for an audit, you will need to provide documentation to support your claim.

Your records should include documents that prove you paid for qualifying medical care. It is also important to keep statements from your insurance company, often called Explanations of Benefits (EOBs), which show what your plan did and did not cover. For transportation expenses, a detailed logbook is recommended.

Important documents to keep include:

• Receipts and invoices from medical providers like doctors, dentists, and hospitals.
• Pharmacy receipts to document the purchase of prescription medications.
• Explanation of Benefits (EOB) statements from your insurance provider.
• A logbook for transportation expenses that records the date, mileage, and medical purpose of each trip, along with receipts for tolls and parking.

How to Claim the Deduction on Your Tax Return

To claim the medical expense deduction, you must itemize your deductions rather than taking the standard deduction. If your total itemized deductions are greater than your standard deduction amount, itemizing will typically result in a lower tax liability.

The deduction is claimed on Schedule A (Form 1040), Itemized Deductions. You will enter your total unreimbursed medical expenses on the designated line. The form’s instructions will then guide you through the calculation of the 7.5% AGI limitation to determine the portion of your expenses that is deductible.

After completing the calculations, the final deductible amount for medical expenses is combined with your other itemized deductions. The total from Schedule A is then transferred to your main Form 1040. This total amount reduces your taxable income, which in turn lowers your overall tax for the year.