Whenever someone asks me if they can deduct medical expenses, my standard answer is “Yes, but….” The “yes” part is easy: expenses for doctors, dentists, hospitals, prescription medications and so forth are tax deductible. And the “but” part? There’s a limit on how much can be deducted. We can only deduct the amount of medical expenses that exceed 10% of a person’s adjusted gross income. Think of it as a floor. The amount has to be over the floor, and then we deduct only the portion above the floor. If a person has income of $50,000, they would have to have more than $5,000 of medical expenses. Even so, this is an important tax break for people with lots of medical bills.
Qualifying Medical Expenses
Generally speaking, a medical expense will qualify for a tax deduction if the expense is for the diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. The following general types of expenses qualify:
• Costs for medical services from physicians, surgeons, dentists and other medical professionals;
• Costs for medications prescribed by a medical professional
• Costs for medical devices, equipment and supplies prescribed by a medical professional (such as eyeglasses)
• Costs for health and dental insurance
• Costs for long-term care and long-term care insurance
• Transportation and lodging costs for traveling to a health care facility, including mileage for driving for medical care at a rate of 16.5 cents per mile (for 2010).
Over-the-counter treatments, nutritional supplements, vitamins, and first aid supplies do not qualify as tax-deductible expenses, unless those items are prescribed by a medical professional. Controlled substances (such as cocaine and marijuana) are not tax-deductible either, even if prescribed.