Is Physical Therapy Tax Deductible?

Medical expense deductions offer tax relief for individuals with significant healthcare costs. The Internal Revenue Service (IRS) allows taxpayers to deduct certain unreimbursed medical expenses that exceed a specific percentage of their adjusted gross income. Understanding which expenses qualify and how to claim them is important for maximizing potential tax benefits.

Qualifying Physical Therapy as a Medical Expense

Physical therapy expenses can qualify as deductible medical expenses if they meet specific IRS criteria. The Internal Revenue Code (IRC) Section 213 defines “medical care” as amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for affecting any structure or function of the body. Physical therapy must be prescribed by a physician or another licensed medical professional to address a specific medical condition or injury.

For example, therapy sessions to recover from surgery, treat a chronic back condition, or rehabilitate after an accident generally qualify. The purpose must be directly related to medical treatment, not for general health improvement or exercise. Expenses for activities like gym memberships or health spas do not qualify unless prescribed by a doctor for a specific medical condition.

Meeting the Deduction Threshold

Even if physical therapy expenses qualify, taxpayers can only deduct the amount that exceeds a specific percentage of their adjusted gross income (AGI). Your AGI is your gross income minus certain above-the-line deductions, such as contributions to a traditional IRA or student loan interest. For most taxpayers, the threshold for medical expense deductions is 7.5% of their AGI.

To illustrate, if your AGI is $50,000, 7.5% of that amount is $3,750. If your total qualified medical expenses for the year are $6,000, you can only deduct the amount above $3,750, which is $2,250. You must itemize deductions on Schedule A (Form 1040) to claim medical expenses, rather than taking the standard deduction. If your total itemized deductions, including medical expenses, are less than the standard deduction amount for your filing status, claiming medical expenses may not provide a tax benefit.

Required Documentation for Your Claim

Thorough and accurate records are needed for substantiating any medical expense deduction, including physical therapy. The IRS requires taxpayers to keep detailed documentation to support their claims in case of an audit. You should retain receipts or invoices from the physical therapy provider that clearly show the services received and the amounts paid. These records should include the date of service, description of the service, and the amount charged.

Explanation of Benefits (EOB) statements from your health insurance company are also needed. These statements detail the services rendered, the amount your insurance paid, and your out-of-pocket responsibility. A written prescription or referral from your doctor for the physical therapy validates its medical necessity. Additionally, keep records of related out-of-pocket costs, such as mileage or public transportation fares incurred to travel to and from appointments, as these can also be included in qualified medical expenses.

Claiming Your Deduction on Your Tax Return

After determining your qualified physical therapy expenses and ensuring they exceed the AGI threshold, you will report these amounts on your federal income tax return. Medical expense deductions are claimed on Schedule A (Form 1040), Itemized Deductions. On Schedule A, you will list your total qualified unreimbursed medical expenses.

The form then guides you through the calculation, applying the 7.5% AGI limitation. The resulting deductible amount, which is the portion exceeding the AGI threshold, is then carried over to your Form 1040. Many taxpayers use tax preparation software or consult with a tax professional, which can help ensure accurate calculation and reporting of these deductions. This structured approach helps ensure compliance with IRS regulations while claiming eligible expenses.