When Are Dental Crowns Tax Deductible?

A dental crown, a cap designed to restore a damaged tooth, can be a significant personal expense. The cost of this dental work may be tax-deductible if it meets specific requirements established by the Internal Revenue Service (IRS). The deduction depends on the procedure’s purpose and how its cost relates to your income. Understanding these rules is the first step in determining if you can lower your tax bill.

Qualifying as a Medical Expense

For a dental crown’s cost to be tax-deductible, it must be a qualifying medical expense. The IRS distinguishes between medically necessary procedures and those that are purely cosmetic. A crown is medically necessary if it treats a dental disease, prevents tooth loss, or repairs damage from an accident. If the primary purpose is to restore function and health, the expense is potentially deductible.

A crown obtained solely to improve appearance is a non-deductible cosmetic procedure. For example, replacing a stained but healthy tooth for aesthetic reasons would not qualify. However, a procedure with both medical and cosmetic benefits, such as a crown that strengthens a tooth while improving its appearance, can still be deductible due to its medical necessity.

The deductible amount is your out-of-pocket cost after subtracting payments from a dental insurance plan. If a $2,000 crown receives a $1,200 insurance payment, only the $800 you paid can be included. Payments from a flexible spending account (FSA) or health savings account (HSA) are not deductible because those funds are already tax-advantaged.

The Adjusted Gross Income Threshold

Having a qualifying medical expense does not guarantee a deduction. The IRS allows taxpayers to deduct the amount of total medical expenses that exceeds 7.5% of their Adjusted Gross Income (AGI). AGI is your gross income minus certain above-the-line deductions. This rule creates a threshold your expenses must surpass before you realize any tax benefit.

For example, a taxpayer with an AGI of $80,000 has a medical expense threshold of $6,000 ($80,000 x 7.5%). If their total qualifying medical expenses were $7,000, they could deduct $1,000, which is the amount over the threshold. If their total expenses were only $5,500, they could not deduct any medical expenses.

The cost of the dental crown does not have to meet this threshold alone. You can combine all qualifying, unreimbursed medical expenses from the year to reach the 7.5% AGI floor. This includes payments for doctor visits, prescription medications, hospital stays, and travel costs for medical care.

How to Claim the Deduction

To claim the deduction, you must itemize deductions on your tax return instead of taking the standard deduction. For many taxpayers, the standard deduction is higher than their total itemized deductions. This decision requires calculating which option provides a greater tax benefit.

If you choose to itemize, you will report your medical expense deduction on Schedule A (Form 1040), Itemized Deductions. You list all itemized deductions on this form, including medical and dental expenses. The total from Schedule A is then transferred to your Form 1040, reducing your taxable income.

Thorough record-keeping is necessary when claiming this deduction. In the event of an IRS inquiry or audit, you must be able to substantiate your claim. Retain all receipts from the dentist detailing the service provided and the amount you paid. It is also important to keep Explanation of Benefits (EOB) statements from your insurance provider, as these documents show the total cost, the amount covered, and your final out-of-pocket responsibility. A letter from your dentist explaining the medical necessity of the crown can also serve as evidence.