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As you’re filling out your 2023 Form 1040 you may ask whether you should itemize on Schedule A or take the standard deduction. Most filers take the standard deduction because it’s higher than their total itemizations. But not all.
Take people with big medical bills. Itemizers can claim medical expenses not reimbursed by insurance, for themselves, their spouse and dependents. The cost must be incurred primarily to alleviate or prevent a physical or mental disability or illness. But there is a floor. Medical expenses are deductible only to the extent the total exceeds 7.5% of your adjusted gross income (AGI). For example, if you itemize, your AGI is $100,000 and your total medical expenses are $9,000, you can deduct only $1,500 of medical expenses on Schedule A ($9,000 - $7,500).
The list of eligible medical expenses for tax deductions is broader than most people think. It includes:
- The basics: Such as out-of-pocket payments to doctors, dentists, optometrists and other medical professionals; mental health services; hospital stays; annual physicals; health insurance and Medicare premiums; prescription drugs; insulin; glasses and contact lenses; hearing aids; and dental work, such as braces and root canals.
- In vitro fertilization: Amounts paid for IVF qualify as medical expenses.
- Medical driving: The 2023 standard mileage rate is 22¢ per mile. It's 21¢ per mile in 2024.
- Treatment for drug use or alcoholism: This cost is considered a medical expense.
- Health and wellness costs: Among other health and wellness costs that qualify as deductible medicals are smoking cessation programs, nutritional counseling for a doctor-diagnosed disease, weight-loss programs and certain special food to help with the treatment of obesity, hypertension, heart disease or other physical illnesses diagnosed by a physician.
- Long-term care costs: If you, your spouse or your dependent requires long-term care you may be able to deduct the unreimbursed costs as medical expenses. Long-term-care expenses include the costs of assisted living, in-home care and nursing home services. The long-term care must be medically necessary for one who is chronically ill. The costs of meals and lodging at an assisted living facility or a nursing home count as medical expenses for people mainly there for medical care. Premiums you pay for a long-term-care policy are deductible medicals, too. But the deduction is capped based on age. The older you are, the greater the write-off.
- Certain home improvements to adapt to a disability or illness: For instance, ramps, wide doorways or entrances, railings and wheelchair lifts.
- The cost of a service dog: Veterinary costs for a service dog to assist the visually impaired and others with physical disabilities are eligible for medical expense deductions. The same is true for the cost of buying and training the dog, plus feeding and grooming. An emotional support animal counts if needed primarily for the owner’s medical care to alleviate a mental disability or illness.
- COVID-19 personal protective equipment: Masks, hand sanitizers and other supplies bought for the primary purpose of preventing the spread of COVID-19.
- The cost of a legal abortion: The procedure must be performed in a state where abortion is legal. Transportation costs are deductible. Hotel expenses of up to $50 a night can also be deducted if the abortion is provided by a doctor in a licensed hospital or a medical care facility. You can take up to an additional $50 a night for a traveling companion’s lodging.
- Genetic testing through DNA ancestry registries: If you use a DNA ancestry for genetic health testing, such as 23andMe, the portion of the DNA collection kit's cost that pertains to genetic testing may be treated as a deductible medical expense.
Among the costs that do not qualify as deductible medical expenses:
- Most food, weight loss supplements or low-calorie beverages.
- Weight-reduction programs or cosmetic surgery procedures to improve your appearance.
- Gym membership fees.
- Teeth whitening and hair transplants.
- An elevator installed in your home (it adds value to your house).
- Over-the-counter medications that are bought without a prescription.
- Amounts paid for marijuana and other substances that aren't legal under federal law. It doesn't matter whether they are legal under state law.
- Illegal operations or treatments.
- Amounts paid to or for a gestational surrogate, including costs to identify and retain the surrogate and the person's medical expenses.
For more details on these and other qualifying and nonqualifying medical expenses, see IRS Publication 502, Medical and Dental Expenses.
This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.
