Medical, Dental Expenses and Tax Deductions
The IRS allows you to deduct a certain amount of medical expenses if you itemize deductions. Qualified medical deductions are expenses you paid during the tax year for yourself, your spouse, or your dependents. When you prepare your 2019 return on eFile.com – due on April 15, 2020 – all you need to do is enter your medical and dental expenses. We will then calculate for you how much of your medical and dental expenses you are qualified to deduct, so you don’t have to figure it out all on your own.
As of Jan. 1, 2019, for your 2019 return, you can only deduct the amount of the total un-reimbursed allowable medical care expenses for the 2019 tax year that exceeds 10% of your adjusted gross income. Let’s say your AGI is $40,000 and your medical expenses are $5,000. As a result you could claim $1,000 on your tax return: $40,000 AGI * 10% = $4,000. Thus, $1,000 exceeds your $4,000 limit of your $5,000 medical expenses. For 2018 the limit was 7.5% or $40,000 * 7.5% = $3,000 or $2,000 in medical deductions. You can deduct medical expenses such medications, dental treatments, eye doctor visits, hospital fees and services. Below are details on medical expenses and medical savings account information.
Medical expenses are the costs associated with the diagnosis, cure, mitigation, treatment, or prevention of any disease recognized by the medical community (this includes Chiropractic practices and Christian Science), and the costs for treatments affecting any area or function of the body. Medical costs include the expenses of equipment, supplies, and diagnostic devices needed for the purposes listed above. They also include dental expenses.
Below is an alphabetical list of qualified medical deductions that might apply to you (more information on medical deductions). Please note that this list is not definitive or all-inclusive.
*You may deduct expenses incurred for a weight loss program if that weight loss was conducted after the diagnosis of a specific illness by your doctor.
**You may deduct transportation expenses that are incurred primarily for medical reasons, e.g. bus fare to and from the hospital, gas consumed on your way to a medical facility. You may also include the cost of meals if they were purchased at a hospital, or similar institution, where you were staying for medical care.
As of July 17, 2019 the IRS added the following chronic condition treatments to the list of preventive-care benefits for which a HDHP – High-Deductible-Health-Plan can pay. This applies also if your health care spending hasn’t surpassed the plan deductible—without conflicting the rules allowing pretax contributions to Health Savings Accounts (HSA). If you as an employee are covered by an HDHP you may contribute to an HSA – with pre-tax dollars. In order to make HSA contributions with pretax dollars, an HDHP may not provide benefits for any year until the minimum deductible for that year is satisfied. However, HDHPs are not required to have a deductible for preventive care.
Generally, medical care premiums can be included in your calculations of medical expenses. However, there are certain medical insurance premiums that you cannot include when calculating your medical expenses for tax purposes:
If you are self-employed, you may be able to deduct 100% of the amount you pay for health insurance for yourself, your spouse, and dependents as an adjustment to income (a non-itemized deduction).
Be aware that the Affordable Care Act (Obamacare) also affects your tax return and health insurance premiums.
In 2019 the limit for deductible or unreimbursed medical/dental expenses was increased to above 10% of your Adjusted Gross Income or AGI.
If your AGI in 2019 is $50,000 the 10% limit of that would be $5,000. If your unreimbursed medical/dental expenses were $6,000 in 2019 you could deduct $1,000 or $6,000 minus the $5,000 limit.
For example:
Your AGI is: $50,000
10.0% of your AGI is: $5,000
Your medical/dental expenses are: $6000
In this case, you can deduct $1,000 or $6,000 minus the $5,000 limit.
For your 2018 return, you can deduct unreimbursed medical/dental expenses that are above 7.5% of your Adjusted Gross Income (AGI).
For example:
Your AGI is: $40,000
7.5% of your AGI is: $3,000
Your medical/dental expenses are: $5000
In this case, you could deduct $2,000 of your medical/dental expenses because $2,000 is the amount above 7.5% of your AGI ($3,000).
For medical expenses that would have been deductible in an earlier Tax Year, you can amend a tax return.
There are certain medical expenses that are not deductible. These expenses include:
You must subtract all reimbursements that you have received for medical or dental expenses from any source throughout the year from your calculation of total medical expenses.
If the cost of medical equipment or property was deducted from your taxes in a previous year and you sell that property in a later year for a profit you may have to record a capital gain. The taxable gain is the amount of the selling price more than the adjusted basis of the equipment or property.
Detailed information on medical and dental expense deductions.
Did you purchase health insurance through the Marketplace? You may qualify for the Premium Tax Credit, and details about Form 8962 – which you can use to help make health insurance affordable.
See what other tax deductions you may qualify to claim on your tax return.
Research & References of Medical, Dental Expenses and Tax Deductions|A&C Accounting And Tax Services
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