Doctors and dentists and labs, oh my!

March 18, 2014 by Carol Thompson, EA
Calculator and Stethoscope

Feeling sick? Broke a foot? Broke a tooth? Kids in braces? Are these deductible on your taxes? Well – maybe. Medical, dental, and even alternative health care expenses might be deductible if you itemize deductions (Schedule A).

There are limitations and rules as to what is deductible, many of which are found in IRS Publication 502 – Medical and Dental Expenses, which states, “Medical expenses are the costs of diagnosis, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body.” So when one of the kids falls out of a tree and breaks a foot, if part or all of it is not covered by insurance, you may be able to deduct it. Some of the rules that are important to know include:

  • New for 2013 – increased limitation floor: Under the new Health Care Act, those under age 65 may only deduct medical expenses in excess of 10% of their adjusted gross income (AGI). Taxpayers born before January 2, 1949, may still use the 7.5% of AGI floor until 2017 when everyone will have the 10% limitation.

  • Paid Expenses. Only the expenses you paid in 2013 are deductible on the 2013 income tax return. If you make payments on services, such as braces, you may only take the amount you paid between January 1 and December 31 of the current year. If you pay by credit card, any payments made are considered the same as cash no matter when you pay the card off.

  • Getting There. Travel costs count, including public transport, ambulance service, parking, tolls, and auto costs (current rate = 24 cents per mile). If you belong to a 12-Step Program, such as Alcoholics Anonymous, the transportation to and from meetings is deductible as medical travel.

  • Reimbursements. Insurance reimbursements must be applied to the total amount of expenses. Your co-pays and out of pocket expenses are deductible. If you have a pre-tax medical plan that covers your co-pays, you can only take the medical expenses in excess of your insurance and your medical plan pre-tax deductions.

  • What Qualifies? Among the expenses that qualify are health insurance (if not pre-tax), co-pays, prescription drugs, insulin and other diabetic needs, long-term medical insurance, eye exams and glasses, dental costs, body scans, hearing aids, and alternative medicine such as acupuncture, chiropractic, and treatment through Christian Science Practitioners.

  • What Doesn’t? Elective cosmetic surgery (except necessary for abnormalities or injuries); dancing lessons for general health; diaper services (unless necessary due to disease); illegal drugs (even if prescribed by a doctor); funeral expenses, health club dues; maternity clothes; nutritional supplements (except as prescribed for a specific medical condition); vacations or supplements that are beneficial to general health; and teeth whitening.

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