Medical Expense Deduction

Medical Expense Deduction refers to the allowable itemized deduction by individuals for unreimbursed payments for medical care, prescription drugs, and medical insurance premiums, limited to the amount that exceeds 7.5% of the taxpayer's adjusted gross income (AGI).
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Medical Expense Deduction refers to the amount individuals can claim as an itemized deduction for their unreimbursed payments for medical care, prescription drugs, and medical insurance premiums. These expenses are only deductible to the extent that they exceed 7.5% of the taxpayer’s Adjusted Gross Income (AGI).

Examples of Medical Expense Deductions

  1. Medical Care Payments: Costs associated with visits to doctors, hospital stays, and laboratory tests.
  2. Prescription Drugs: Costs for medications prescribed by a doctor.
  3. Medical Insurance Premiums: Out-of-pocket expenses paid for health insurance policies.

Frequently Asked Questions

What counts as deductible medical expenses?

Deductible medical expenses include costs for diagnosis, cure, mitigation, treatment, or prevention of disease, and treatments affecting any part or function of the body. Additionally, it includes payments for dental and eye care, vision correction surgery, and prescription medications.

Is there a limit to how much I can deduct for medical expenses?

The deduction is limited to the amount of unreimbursed medical expenses that exceed 7.5% of the taxpayer’s Adjusted Gross Income (AGI).

Can I deduct medical expenses for my dependents?

Yes, medical expenses paid for a dependent who meets tax definition requirements can be included in your deduction.

Are non-prescription drugs deductible?

Generally, non-prescription drugs (except insulin) are not deductible.

  • Itemized Deductions: Deductions that taxpayers can take for various expenses, which are listed separately on the IRS form Schedule A.
  • Adjusted Gross Income (AGI): Gross income minus adjustments to income, used as the basis to calculate the threshold for various deductions and credits.

Online References

Suggested Books for Further Studies

  • “IRS Enrolled Agent Exam Study Guide” by Richard Gramkow
  • “Deduct It! Lower Your Small Business Taxes” by Stephen Fishman J.D.
  • “Tax Deductions for Professionals” by Stephen Fishman J.D.

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