Most people see a psychologist for the mental benefits of having someone to talk through certain life issues. However, seeing a psychologist might also have tax benefits. Most psychologist appointments are deductible, but the deduction may not actually help you on your income taxes, depending on your financial situation.
Only medical expenses that are for the "diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body." Your psychologist appointments are deductible as a medical expense, according to IRS Publication 502, but only to the extent it is for medical care. You can also include the cost of psychologist appointments for your spouse or your dependents, if applicable.
Psychological Medical Care
The psychologist's treatment must be related to treating a physical or mental defect. For example, the IRS ruled that marital counseling to improve the marital relationship wasn't deductible as a medical expense, because it wasn't related to a mental or physical defect. However, in other rulings, the IRS has held that the cost of psychiatric treatment for sexual inadequacy and incompatibility was closely related enough to a medical or physical defect that those costs could be deducted.
Medical Deduction Limitations
Just because a psychologist's appointment qualifies as a medical expense doesn't mean you'll actually be able get credit for it on your tax return. In 2012, you can only deduct medical expenses that exceed 7.5 percent of your adjusted gross income. For future years, the floor goes up to 10 percent. For example, if your AGI is $51,000, using the 10 percent floor, you're only able to deduct your medical costs that exceed $5,100. Unless you've got a very expensive psychologist, you're probably going to need some other medical expenses to be able to take any deduction.
You must itemize your taxes in order to claim your psychologist appointments. If you can only deduct a few hundred dollars or so after accounting for the AGI floor, you might not benefit if you give up your standard deduction to itemize. However, if you were already planning to itemize because of other itemized deductions, such as the mortgage interest deduction or charitable contributions, any medical expenses can also be deducted without further cost.
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."