What Counts Toward a Medical Deduction?

Most trips to the doc count toward your medical expenses deduction.

Most trips to the doc count toward your medical expenses deduction.

Qualifying medical expenses may reduce your taxable income, but the deduction is hard to claim. Unless you're self-employed, you can't deduct your medical expenses without itemizing. Plus, only the portion that exceeds a percentage threshold of your adjusted gross income is deductible. The threshold equaled 10 percent as of 2013, but that can always change.

Qualifying Expenses

Qualifying medical expenses can include what you spend for treatments, diagnosis, cures and prevention of disease. Sorry, your tummy tuck and botox don't qualify. It also doesn't include things generally beneficial to your overall well-being, like that relaxing trip you took to the Bahamas. The expenses must be paid during the calendar year. For example, if you had surgery on Dec. 15, 2012, but didn't pay the bill until Jan. 15, 2013, the government expected that to show up on your 2013 tax return. If you paid the bill on Dec. 31, 2012, it counts for 2012.

Premiums and Reimbursement

You can include medical insurance premiums you paid for out of pocket, but not any premiums paid with pretax dollars. That can happen if your employer pays for your insurance and doesn't count it in your taxable income. You also can't deduct anything your insurance covers or reimburses. If you pay $500 for a doctor's appointment, and your insurance company sends you a check for $400, only $100 is considered deductible.

Expenses for Others

Medical expenses include those paid for you, your spouse and your dependents. For spousal and dependent expenses, the expense must be incurred or paid while you were married. For example, if your spouse had surgery six months before the wedding, it doesn't count as a tax break even if you got married in the same calendar year. If the surgery came after you tied the knot, you can. Alternatively, if your ex had the procedure done while you were still married, you can deduct that bill if you paid before or after the divorce.

Self-Employed Insurance

If you're self-employed, the Internal Revenue Service grants you a special deduction only for your insurance premiums. You get an above-the-line deduction for premiums paid for yourself, your spouse, your dependents and your children under age 27. The plan must be set up under the name of your business, and you can't deduct more than your net income. For example, if you make $3,000, you can't deduct more than $3,000 in health insurance premiums. If you take this deduction, you can't double dip and claim the premiums as part of the regular medical expenses deduction.


About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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