Medical Expenses: A Federal Income Tax Deduction

Medical expenses are just one of the many itemized deductions a taxpayer can have. However, not all medical expenses are tax deductible. When an item is tax deductible, that means that this can be subtracted from the amount of tax that the taxpayer is liable for; making your taxes to be paid lower and a potentially higher refund.

Schedule A is the form used to list your itemized deductions and medical expenses are the first item on the schedule. Taxpayers are allowed a deduction for themselves, spouses, and dependents. However, Congress decided that only a certain portion of medical expenses are deductible. The others are considered personal in nature therefore limitations have been put in place. The formula for calculating a taxpayer’s medical expense deduction is as follows:

Prescription medicines and drugs, insulin, doctors,………… $ xxx
dentists, hospitals, medical ins. premiums

Other medical and dental expenses, such as lodging,..……… $ xxx
transportation eyeglasses, contact lenses, etc.

Less insurance reimbursements……………………………………. -(xxx)

Subtotal: …………………………………………………............................xxx

Less 7.5% of Adjusted Gross Income (AGI)………………..……….. -(xxx)

Excess expenses qualifying for the medical deduction………….. =xxx

Now that you have the formula to figure out your deductions, let us glance at what medical expenses qualify as deductions on your tax return.
The expenses that are deductible include the cost of items for the diagnosis, cure, mitigation, treatment, and prevention of disease. Also included are expenditures incurred that affect any structure or function of the body. Therefore, amounts for all of the following categories of expenditures qualify as medical expenses:

Prescription medicines and drugs and insulin
Fees for doctors, dentists, nurses, and other medical professionals
Hospital fees
Hearing aids, dentures, eyeglasses, and contact lenses
Medical transportation and lodging
Medical aids, such as crutches, wheelchairs, and guide dogs
Birth control and prescriptions
Acupuncture
Psychiatric care
Medical insurance premiums
Certain capital expenditures
Nursing home care for the chronically ill (Example: Alzheimer’s disease care)

In some rare cases the IRS has allowed some unusual medical expenses. For example:

· Long distance phone calls made to psychological counselor

· New siding replacing old siding on a home because the taxpayer was allergic to mold growing on the siding

· A wig prescribed by the psychiatrist for a taxpayer who was upset over hair loss

· A cell phone for a taxpayer who may need instantaneous medical help

· Treatments provided by an Indian medicine man

Now let us take a glance at the certain medical expenses that are NOT deductible. The cost of travel for the general improvement is NOT deductible. The expense of a swimming pool is not deductible unless the pool is designed especially for the hydro therapeutic treatment of the taxpayer’s illness. No deduction is allowed for the cost of weight-loss programs (unless prescribed by a doctor; diet foods do not qualify) and there is no deduction for marriage counseling either.

Medical expenses for unnecessary cosmetic surgery or similar procedures are NOT deductible. There are three factors that determine the eligibility of cosmetic surgery:

1. A congenital abnormality

2. A personal injury resulting from an accident or trauma

3. A disfiguring disease

This is just a brief overview of the deductions allowed on your tax return on Schedule A under medical expenses. Stay tuned for my next hub that goes into further detail on the various categories that are allowed. Thanks for reading!

<a href="http://hubpages.com/_1efhmq8u3a567/hub/Medical-Expenses-in-Detail">Medical Expense Tax Deductions in Detail</a>