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
- Medical Care Payments: Costs associated with visits to doctors, hospital stays, and laboratory tests.
- Prescription Drugs: Costs for medications prescribed by a doctor.
- 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.
Fundamentals of Medical Expense Deduction: Taxation Basics Quiz
### Are over-the-counter medicines generally deductible?
- [ ] Yes, all over-the-counter medicines are deductible.
- [ ] Yes, but only if prescribed by a doctor.
- [x] No, except for insulin.
- [ ] No, they are never deductible.
> **Explanation:** Generally, over-the-counter drugs are not deductible except for insulin.
### What percentage of AGI must medical expenses exceed to be deductible?
- [ ] 5%
- [x] 7.5%
- [ ] 10%
- [ ] 3%
> **Explanation:** Medical expenses must exceed 7.5% of the taxpayer's Adjusted Gross Income (AGI) to be deductible.
### Are premiums paid for medical insurance deductible?
- [x] Yes
- [ ] No
- [ ] Only for self-employed individuals
- [ ] Only for employer-sponsored insurance
> **Explanation:** Unreimbursed premiums paid for medical insurance are considered deductible medical expenses.
### Can you deduct medical expenses paid for a dependent?
- [x] Yes
- [ ] No
- [ ] Only for minor dependents
- [ ] Only if the dependent’s income is below a certain level
> **Explanation:** Medical expenses paid for a dependent who met the tax definition requirements can be included in your deduction.
### Can you include dental and eye care in medical expense deductions?
- [x] Yes
- [ ] No
- [ ] Only dental, not eye care
- [ ] Only if medically necessary
> **Explanation:** Dental and eye care expenses are deductible if they meet other criteria under the medical expenses.
### Are travel expenses related to medical care deductible?
- [x] Yes
- [ ] No
- [ ] Only for major trips
- [ ] Only if over a specified distance
> **Explanation:** Travel expenses for medical care, including mileage and public transport costs, can be deductible.
### Is cosmetic surgery generally deductible?
- [ ] Yes
- [ ] Only with IRS approval
- [x] No, unless it is medically necessary
- [ ] No, never
> **Explanation:** Cosmetic surgery expenses are generally non-deductible unless they are medically necessary.
### Can alternative therapies be deducted if prescribed by a doctor?
- [x] Yes
- [ ] No
- [ ] Only traditional treatments
- [ ] Only if within the U.S.
> **Explanation:** Alternative therapies prescribed by a medical professional can often be included in deductible medical expenses.
### Are the costs of medical equipment like wheelchairs deductible?
- [x] Yes
- [ ] No
- [ ] Only if used outside the home
- [ ] Only if rented
> **Explanation:** Costs for medical equipment such as wheelchairs, crutches, and similar items are deductible.
### Does the IRS allow deduction for medical expenses on a per person basis?
- [ ] Yes, per person
- [x] No, by household
- [ ] Yes, if filed separately
- [ ] No, depends on income bracket
> **Explanation:** Medical expense deductions are accounted for by household, not per person.
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