Deducting Medical Expenses

If you itemize your deductions on Form 1040, Schedule A, you may be able to deduct medical expenses. Here are some things to keep in mind:

• You may deduct the amount of medical expenses that exceed 7.5% of your adjusted gross income. Starting in 2013 as part of the new health care law, the threshold will increase to 10%.

• You can only deduct medical expenses you actually paid during the year, minus any reimbursements.

• You can deduct expenses you pay for yourself, spouse, and dependents. If you’re divorced or separated, each parent can deduct the medical expenses he or she actually pays for a child, even if the child is not claimed as a dependent.

• You can deduct transportation and traveling costs to a health care facility. Transportation costs include mileage, tolls, and parking fees.

• Lodging is deductible if the trip is primarily for and essential to medical care. Lodging expenses for a person accompanying the individual seeking medical care is also deductible, but meals are not deductible. The deduction is limited to $50 per night per individual.

• Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if you pay qualified medical expenses with the proceeds.

• Medical expenses are those that are for the prevention or alleviation of a physical or mental defect or illness. This includes payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or treatment affecting any structure of the body. The following types do qualify:
   o You can deduct the costs of health insurance, dental insurance, long-term care, and long-term care insurance.
   o Medicines prescribed by a medical professional. Insulin does not need a prescription, but is deductible.
   o Costs for medical devices, equipment, and supplies, such as eyeglasses and wheelchairs, as prescribed by a medical professional.
   o Co-pays for doctors, dental visits, and eye exams qualify as medical expenses.
   o Weight-loss programs are only deductible if it is prescribed by a physician to treat a specific disease. You can include the cost of special food only if the food does not satisfy normal nutritional needs, the food alleviates or treats an illness, and a physician confirmed the need for the food.

The following types do not qualify:
   o Over the counter medicines and treatments, nutritional supplements, vitamins, and first aid supplies do not qualify unless specifically prescribed by a medical professional. Medications obtained from another country cannot be deducted as medical expenses.
   o Medical marijuana or other controlled substances are not deductible as medical expenses, even if your state allows it.
   o Gym memberships, teeth whitening, and cosmetic surgery that is only cosmetic in nature is not deductible.