Not too many people look forward to trips to the doctor. While a tax deduction usually won't motivate you to get your annual checkup, it might make you feel a little better about going. However, figuring the amount of your deduction isn't as simple as totaling up your medical expenses for the year.
Only medical expenses paid for diagnosis, treatment or prevention of diseases qualify as part of the medical-expenses deduction. Examples of qualifying costs include your annual checkup, bloodwork to determine what's wrong, and surgery or prescription drugs to treat your condition. Generally, cosmetic procedures don't qualify. In addition, you can't count any costs that you're reimbursed for, such as when your insurance either pays the costs or reimburses you.
Eligible Individuals and Timing
The deduction isn't limited to your own trips to the hospital. You can use medical expenses you paid for your spouse and your dependents, as long as that person was your spouse or dependent either when they incurred the charges or when you paid the costs. When you can deduct the costs depends on when you paid it, not when the medical work was provided. For example, if you prepay for your surgery in December 2013, but you don't actually go under the knife until January 2014, claim the expenses in 2013. However, if you claim expenses that you paid for someone else, they can't use them on their own tax return because they didn't pay the costs. For example, if you paid the bill for your wife's surgery and you file separate returns, when you claim those expenses on your return, she can't claim the same expenses on her return.
The medical-expense deduction isn't a straight dollar-for-dollar deduction. Instead, you can only deduct the costs that exceeds the threshold percentage of your adjusted gross income -- 7.5 percent in 2012 and 10 percent in 2013 and beyond. For example, if in 2014 you have $62,000 as your AGI and $8,000 of medical expenses, your deduction would be just $1,800. Besides the threshold hurdle, you also have to itemize. If you don't, you aren't permitted to deduct your expenses.
Special Sole-Proprietor Deduction
If you've got your own business, you might qualify for a special deduction for your medical insurance premiums that allows you to write off the expenses without itemizing or having to exceed the 7.5 percent threshold. To qualify, you have to establish your medical insurance under your business name and you can't be eligible for insurance through either your employer or a spouse's employer. For example, if you have a sole proprietorship and you work as an employee, and you could get medical insurance through the employer, you aren't eligible. Premiums for your spouse and dependents also count, but you can't deduct more than your net self-employment earnings.
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."