Medical expenses can take up a major part of your budget, especially if you don’t have funds set aside for any unexpected emergencies. Luckily, just as the doctor ordered, the IRS gives taxpayers a few breaks in the form of tax deductions.
Before you go claiming your entire medical bill on your tax return, study up on these five rules when deducting medical expenses.
In order to claim medical expenses, the total of your medical expenses must exceed 10% of your adjusted gross income (AGI). For example, if your AGI is $50,000, the first $5,000 of expenses doesn’t count for the deduction.
In order to rightfully claim your deduction, your medical deductions must be itemized. Itemizing requires that you do not take your standard deduction.
If you contribute to a Health Savings Account and you used this to pay for your medical expenses, you cannot claim the deduction, as these are already categorized as a tax-free deduction.
In order to claim specific medical expenses, you must have paid for these expenses during the same calendar year as your tax return. If you plan on paying for medical expenses in the future, it is easier to do so electronically. If you pay by check, the date of the check counts as the qualified date of payment. In order to avoid this date tracking hassle, pay electronically.
Be sure to brush up on what medical expenses you can technically claim, before doing so. While the list is a lengthy one, it is important to be sure you’re in compliance. As a quick guide, here are a few: acupuncture, nursing care, x-rays, swimming (as prescribed by a doctor), oxygen and oxygen equipment, medicines and drugs, lodging expenses while away from home to receive treatment, hospital care, eye surgery and laboratory fees.
With anything tax-related, if you’re unsure about deduction capabilities, don’t claim it on your tax return. Seek a licensed professional for the experienced help you need. You’ll thank them in the long run.