What You Need to Know About Tax Deductible Medical Expenses
Tax season can be a stressful time for many individuals, but understanding the ins and outs of tax deductions can help ease the burden. One area that often confuses taxpayers is medical expenses. In this article, we will explore what qualifies as a tax-deductible medical expense and provide some surprising examples that you may not be aware of.
To begin with, it is important to note that only taxpayers who itemize their deductions on Schedule A can claim medical expenses. These expenses must not be reimbursed by insurance and should primarily aim to alleviate or prevent a physical or mental disability or illness. However, there is a floor to consider. Medical expenses are deductible only if they exceed 7.5 percent of your adjusted gross income (AGI).
Let’s illustrate this with an example. If you have an AGI of $100,000 and your total medical expenses amount to $9,000, you can only deduct $1,500 ($9,000 – $7,500) of medical expenses on Schedule A. This means that the total cost of medical expenses must surpass the threshold before any deductions can be made.
Now that we understand the basics, let’s dive into some surprising examples of eligible medical expenses. Of course, out-of-pocket payments to doctors, dentists, optometrists, and other medical professionals are deductible. But did you know that in vitro fertilization is also considered an eligible expense? This can come as welcome news for individuals or couples struggling with infertility.
Another interesting inclusion on the list is medical driving. If you need to travel for medical appointments, you can deduct a certain amount per mile. In 2023, the rate is 22 cents per mile, while in 2024, it will be 21 cents per mile. This can provide some relief for those who have to commute long distances for specialized treatments.
Additionally, expenses related to the treatment of drug use or alcoholism can be deducted. This highlights the importance of seeking help for these issues and the potential financial benefits that can come with it. Health and wellness costs, such as smoking cessation programs and nutritional counseling for doctor-diagnosed diseases, are also eligible.
Surprisingly, certain home improvements to adapt to a disability or illness can be deducted. This can include modifications like wheelchair ramps, bathroom grab bars, or even a stairlift if necessary. These deductions can make a significant difference in the lives of individuals with disabilities, allowing them to create a more accessible living environment.
Lastly, the cost of a service dog is considered an eligible medical expense. Service dogs play a crucial role in assisting individuals with disabilities and can provide much-needed support and companionship. Knowing that the cost of obtaining and caring for a service dog can be deducted can be a relief for many individuals who rely on these incredible animals.
Understanding the range of eligible medical expenses can make a significant impact on your tax returns. By taking advantage of these deductions, you can potentially reduce your tax liability and keep more money in your pocket.
In conclusion, it is important to keep track of your medical expenses and understand the criteria for deductions. While the floor of 7.5 percent of your AGI may seem high, there are various eligible expenses that can help you surpass this threshold. From basic out-of-pocket payments to surprising inclusions like in vitro fertilization and service dogs, knowing what qualifies as a tax-deductible medical expense can potentially save you money. So keep those receipts and consult with a tax professional to ensure you’re making the most of these deductions during tax season.
