How to Determine Which Medical Expenses are Tax Deductible

Even if you have the best insurance plan, you still might end up paying medical bills. However, all hope is not lost.

You can still get a tax break from your medical expenses, which can help reduce your overall medical costs.

The medical expense tax deduction allows taxpayers to deduct qualified medical expenses that exceed a certain percentage of their adjusted gross income (AGI).

For the tax years 2023 and 2024, the threshold is 7.5% of your AGI. This means that you can only deduct medical expenses that exceed 7.5% of your Adjusted Gross Income.

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The “Medical” Expenses You Can Deduct

The term medical is used broadly, but it does include dental and vision expenses.

So whether you’ve gotten contact lenses, glasses, veneers, braces, or root canals this year, you can claim the medical expenses tax deduction.

It doesn’t just stop there, though.

Other medical deductions can include medical devices, psychiatric treatment, psychological treatment, preventative care, prescription medicines, and even surgeries, all fall under the scope of “medical deductions” for your taxes.

Even those travels to and from the doctor’s office and monthly insurance payments are considered deductibles.

Medical Expenses That You Can’t Deduct

Before you claim every procedure as a deductible on your taxes, you need to know what is not allowed as an IRS medical deduction this year.

If you’ve been reimbursed for the procedure by either an employer or an insurance agent, you are unable to deduct the expense from your taxes.

This does not include medical pre-payment plans, though. So, you’re going to be covered if you had help from a credit provider for the procedure.

Cosmetic surgeries cannot be claimed either unless they were a “life-saving procedure” or contributed to a fix to a serious health issue you were facing.

For most cosmetic surgeries, you won’t be able to claim medical deductions. You also cannot claim everyday health and hygiene products or over-the-counter pharmaceuticals.

Is Medical Insurance Tax Deductible?

Any out-of-pocket health insurance premiums you pay for plans that include medical care are tax deductible.

(Medical insurance coverage, with certain exceptions, covers treatment such as hospitalization, surgery, and X-rays; prescription medications, insulin, dental care, lost or broken contact lenses; and long-term care.)

You can write off these costs for you, your spouse, and your dependents when filing your taxes.

Is There a Tax Deduction for Medical Mileage?

Yes, If the transportation costs are primarily for and necessary to the medical care, you may be able to claim mileage reimbursement from the IRS.

You can choose between the following two approaches when subtracting mileage for medical care:

  • Standard personal car mileage is $0.16 per mile.
  • Actual costs you’ve incurred for using the car to transport patients

Itemization or Standardization?

While it would be a dream to claim both, you aren’t able to claim both an itemized tax deduction with your standard deduction.

Essentially, your medical deduction needs to be significant, along with other itemizations, to give you a great deduction.

If you’re not sure which is better, you don’t have to worry. Online tax calculators offer you a simple solution by processing all the data and picking the one that gives you the best tax refund.

Are Pet Medical Expenses Tax Deductible?

Unfortunately, you cannot claim medical expenses for dogs as a deduction on your tax return. Only if your pet is a recognized service animal, such as a guide dog, would there be an exception.

If your pets are recognized service animals, you may be able to deduct the costs of their medical care if you have a physical handicap, hearing loss, or vision impairment.

Purchase, training, and upkeep costs for the animal, including food, grooming, and medical care, may be paid.

The IRS does not classify therapy animals as trained service animals. Visit Publication 502: Medical and Dental Expenses for further details on the deduction of medical costs for pets (service animals).

If you do have a licensed service animal, you can list the expenses for keeping the animal in good health on Schedule A under medical expenses.

Make Sure to Pay Your Medical Expenses

Although paying your medical expenses isn’t fun, it’s the only way you can deduct them from your income.

When it comes down to it, Uncle Sam believes you are only owed a deduction if you’ve paid up on the current bill.

You cannot ask for deductions on future expenses, so you want to be current on the bill. Even if you pay it on a credit card, it is “paid” by you.

So, if you’ve been plagued by medical issues this year, consider an itemized deduction for this tax season.

How to Claim the Medical Expenses Deduction

To claim the medical expenses deduction, you have to itemize your deductions. Additionally, you should only claim this deduction if it is higher than the standard deduction.