Medical Expense Deduction

It’s that time of year again, tax season!  As you prepare your 2016 tax return, recall that changes were made to the itemized deduction for medical expenses back in January 2013. The IRS allows taxpayers to deduct medical expenses that exceed 10% of their adjusted gross income, which is an increase from the previous threshold of 7.5%.  There is a temporary exemption on the increase for taxpayers 65 and older, and 2016 is the last year taxpayers 65 and older are able to file under the old 7.5% threshold. Beginning in January of 2017, all taxpayers will be subject to the higher 10% threshold.

Whether you have a CPA prepare your return or you do it yourself, you may find yourself wondering what counts as a qualified medical expense.  The IRS website states, “medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payment for treatments affecting any structure or function of the body.” Unreimbursed medical and dental expenses paid within the tax year for you, your spouse and your dependents all count towards meeting the deduction threshold.     

Below is a short list of expenses taxpayers often forget are eligible medical expenses for deduction purposes. For a more complete list, IRS Publication 502 outlines what medical expenses are includible and how much of the expenses you can deduct.Sharkey, Howes & Javer Denver, CO | Medical Expenses Blog

  • Capital Expenses – amounts paid for improvements or equipment installed in a home or car for medical purposes, including operation and upkeep
  • Acupuncture and Chiropractor
  • Hearing Aids, Artificial Teeth, Contact Lenses, and Eyeglasses
  • Medical Conferences – includes admission and transportation if the conference concerns a chronic illness of yourself, your spouse or a dependent
  • Transportation to and from medical treatments – includes car, bus, taxi, train, plane fares or ambulance service
  • Weight-loss Program – if the program or treatment is for a specific disease diagnosed by a physician

Throughout the year, keep adequate records of your medical expenses showing the name and address of each medical care provider you paid and the amount and date of each payment. Consider keeping a file of receipts, cancelled checks, or bills, along with a description of the care received to support your expenses.   

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