Editor's Note: This article is part of our 2013 Tax Tips series. Robert Flach is an expert with almost 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.
NEW YORK (MainStreet) — Internal Revenue Code Section 213(a)(1) tells us that you if you itemize, you can deduct as a medical expense amounts paid for the “diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body.”
Medical expenses are deductible on your 2012 Schedule A only to the extent that the total exceeds 7½% of your Adjusted Gross Income (AGI). If your AGI is $70,000, the first $5,250 of medical expenses is not deductible. If your total medical expenses for the year are $5,000 you get no deduction. If your medical expenses for the year total $6,000 you get a tax deduction of $750 ($6,000 less $5,250).
Medical deductions are not limited to costs involved for physical disorders, but include expenses relating to psychological and emotional disorders as well.
Neither the medical practitioner prescribing the treatment nor the method of treatment prescribed has to be American Medical Association approved or sanctioned to claim a tax deduction, as long as the practitioner and treatment are valid within the patient’s religious or cultural context. Deductions for treatment by Christian Science Practitioners and Native American medicine men have been upheld by the IRS and the courts.
Deductible medical expenses include the non-reimbursed out of pocket costs of:
- Fees paid to doctors, dentists, therapists, and other medical practitioners, and for hospital care.
- Cosmetic or plastic surgery that is necessary to improve a deformity related to a congenital abnormality, an injury from an accident or trauma, or a disfiguring disease. The cost of elective cosmetic surgery is not deductible. You cannot deduct face-lifts, hair and breast implants, hair removal and liposuction; however you can deduct breast augmentation surgery after a mastectomy. And on rare occasions breast implants have been allowed as a business deduction.
- Prescription medicines and drugs. Non-prescription drugs are not deductible. While several states now allow doctors to prescribe marijuana for certain medical conditions, the IRS has decided to “just say no” to a tax deduction for medically prescribed marijuana. According to the Internal Revenue Code you cannot deduct expenses for an illegal activity. Under the federal Controlled Substance Act marijuana is an illegal controlled substance. Prescription drugs purchased from Canada are also not deductible, as they are illegal.
- Travel to and from doctors, dentists, hospitals, clinics, therapists, etc. to receive medical care (see Tax Tip: Deducting Medical Travel).
- Health insurance premiums, whether you pay the premium directly or it is deducted from your payroll or pension check, unless the payroll deduction is part of a pre-tax Section 125 or cafeteria plan. This includes COBRA payments, dental, prescription, and contact lens insurance, a separate charge for medical coverage included in your dependent child’s college fees, and the amount deducted from monthly Social Security and Railroad Retirement benefits to pay for Medicare Part B and Part D premiums.
- Long-term care insurance premiums. The deduction is limited based on the taxpayer’s age (age 40 or less = $350, age 41-50 = $660, age 51-60 = $1,310, age 61-70 = $3,500, and age 71 + older = $4,370). Each spouse is treated separately in determining the age-based limitation.
- Long-term care expenses, which are the necessary diagnostic, preventive, therapeutic, curing, treating and rehabilitative expenses and maintenance and personal care expenses of a chronically ill person that are prescribed by a licensed health practitioner (a physician, registered nurse, or licensed social worker). A chronically ill patient is a person who is unable to perform two of the following tasks without substantial (hands on) assistance for a period of 90 days: eating, toileting, bathing, dressing, continence, or a person requiring substantial (hands on) assistance to protect himself/herself from threats to health and safety due to severe cognizant impairment (comparable to and including Alzheimer’s disease – impairment of short-term or long-term memory, orientation as to people, places or time, or deductive or abstract reasoning).
- Nursing services connected with caring for a patient’s medical condition, including home health care and a nursing attendant traveling with a disabled person. You can deduct the cost of the attendant’s wages, related payroll taxes, and room and board.
- Special supplies, equipment, devices and services relating to a medical condition or impairment. The cost of eyeglasses and contact lenses, hearing aids, dentures and false teeth, artificial limbs, prosthetic devices, crutches, orthopedic shoes, wheel chairs, diabetic testing materials, elastic stockings, oxygen and oxygen equipment, an air conditioner, humidifier or air cleaner to benefit a sick person, special telephone equipment and television close-captioning equipment for the hearing impaired, guide dogs or other animals aiding the blind, deaf and disabled, X-Rays, blood and other diagnostic tests, etc. are deductible. The cost of maintenance and upkeep of these items, such as hearing aid batteries and repairs and contact lens solutions, is also deductible.
- Stop smoking programs (whether or not prescribed or recommended by a doctor) and drugs prescribed to alleviate nicotine withdrawal. Non-prescription “over-the-counter” aids such as nicotine gum and patches are not deductible.
- The cost of treatment at a drug or alcohol rehabilitation facility, including meals and lodging provided by the facility.
- The cost of fertilizing and transferring a donated egg or embryo, as well as expenses to obtain an egg donor that are directly related to and in preparation for receiving the donated eggs or embryo. This includes agency fees, donor fees, the donor’s medical and psychological testing fees, insurance premiums paid for post-procedure assistance, and legal fees for preparing the donor contract.
- Breast pumps and supplies that assist in lactation.
- Nursing home expenses. If the main reason for being in a home is to obtain medical care or qualified long-term care services, the entire cost of the home, including charges for meals and lodging, is fully deductible. If medical care is not the primary reason for entering a home, only that portion of the cost that is actually spent on medical care and treatment is deductible. A one-time medical payment for a lifetime of medical care in a nursing home can be deducted in full in the year it is paid, even though the medical care will be provided in the future.
- The “lump-sum” entrance fee paid to a “life-care” or “continuing-care” facility that is specified in the residential agreement as a condition for the facility’s promise to provide lifetime care that includes medical care. The qualifying amount may be deducted in full in the year it is paid, even though the medical care will be provided in the future.
- The registration fee for and travel to a medical conference to acquire medical information to be used in making decisions relating to a specific chronic medical condition or disease of the taxpayer, spouse or a dependent. Related meal and lodging expenses are not deductible.
- Tuition and fees for a mentally or physically disabled person, or a person with severe learning disability, to attend a special school with resources to deal with the disability. The cost of meals and lodging at the school and round trip travel to the school are also deductible. For the costs to be deductible overcoming the disability must be the principal reason for attending the school. Dyslexia can be considered a severe learning disability.
- Home improvements that provide a medical benefit. Deductions have been allowed for an elevator for a person with a heart condition, central air conditioning for a person with a respiratory ailment, and replacement siding when the owner was allergic to the original siding material. You can deduct the cost of the improvement less the amount of any resulting increase in the fair market value of the home.
- Changes to the residence of a handicapped individual to make it more “accessible”, such as entrance and exit ramps, a stairway chair lift, widening doors and hallways, installing railways, lowering or modifying counters and cabinets, modifying chairs and adjusting electrical outlets and fixtures. Adaptations to a motor vehicle to accommodate a handicapped person, such as hand controls and lifts, are also deductible.
Over the years, when prescribed by a doctor, a medical deduction has been allowed for –
- The “additional” costs of special food products to alleviate a specific medical condition
- Clarinet lessons to treat a dental condition
- Commuting to work when employment was prescribed as therapy to treat a medical condition
- An exercise or weight-loss program to alleviate a specific medical condition (including obesity)
- Lead paint removal if a child has been poisoned from eating the paint
- Legal fees paid to authorize treatment for mental illness
- Lamaze and other childbirth preparation classes
- A mattress and board to alleviate an arthritic condition
- A reclining chair for a person with a cardiac condition
- Therapeutic swimming costs
- A trained cat to provide an alert of unusual sounds for the hearing impaired
- A wig for the mental health of a patient with hair loss caused by disease
- Whirlpool baths prescribed by a physician
Of course you must reduce your medical expenses by any reimbursements you receive from your insurance provider, your employer under a medical reimbursement or pre-tax flexible benefit plan, an Archer Medical Savings Account, a Health Savings Account, or any other source.