Medical expenses can put a serious dent in anyone’s budget, and especially during uncertain times, it’s crucial to know how they impact your taxes.
So, let’s dive into a question you might be too afraid to ask your tax accountant: Are medical expenses tax deductible?
Fortunately, the IRS does offer some relief. If you find yourself with medical bills not fully covered by insurance, you might be eligible for deductions to lighten your tax load.
But what exactly can you deduct, and how does it work?
Well, the IRS allows deductions for a range of medical expenses, including preventative care, surgeries, dental and vision care, prescription medications, and even travel expenses for medical care. But here’s the kicker: these expenses must be unreimbursed to qualify.
Now, the deduction value varies based on your income. Generally, you can deduct the total qualified unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income if you itemize your deductions.
Thanks to the Tax Cuts and Jobs Act, the standard deduction nearly doubled. So, when you file your taxes, you’ll need to choose between claiming the standard deduction or itemize. If your itemized deductions, including medical expenses, surpass the standard deduction, itemizing might be the way to go.
However, not all medical expenses qualify for deductions. Cosmetic procedures, nonprescription drugs, and certain health purchases are excluded. And remember, if you’ve already used funds from a flexible spending account or health savings account, those expenses aren’t deductible.
So, how do you claim these deductions? Simple.
Itemize your deductions using IRS Form 1040 and attach Schedule A. Then, report your total medical expenses and calculate the difference between your expenses and 7.5% of your adjusted gross income.
So, there you have it. Don’t let medical expenses weigh you down—take advantage of these deductions and keep more money in your pocket. And remember, if you’re unsure, your tax accountant is always there to help.
As always, if you have questions reach out to Paragon today!
