Taking an unexpected trip to the doctor can really bust your budget. Depending on your insurance, you can pay up $7,500 just to fix a broken leg. That’s the bad news. The good news is your out-of-pocket medical and dental expenses may be deductible on your tax return.
Taxpayers are only allowed to deduct medical, dental and pharmaceutical expenses that exceed 10% of their adjusted gross income (AGI). For example, if your AGI is $10,000 and your medical expenses are $1,500, you can only deduct the portion over $1,000. 10 percent may seem like a lot but once you factor in expenses for you, your spouse and dependents, it’s not that far-fetched. There is an exception to the rule. Taxpayers aged 65 and older can deduct any expenses exceeding 7.5% of their AGI. Take advantage while you can, this special exception is set to expire on December 31, 2016.
Generally, you can deduct any expenses related to the diagnosis, treatment and prevention of your illness. This includes the cost of insulin and other prescribed medication. If you went under the knife for a facelift, breast enhancement or anything of that nature, don’t bother looking for those receipts. Most cosmetic surgeries are non-deductible. Please note, all bills must have been paid during the calendar year in order to count towards your limit. For a detailed list of deductible expenses, check out IRS Publication 502.
Don’t overlook travel expenses
When it comes to qualified expenses, you’re not limited to the figure on your doctor’s bill. Any money spent on transportation to and from your appointment may also be deductible. This includes the cost of taking a cab, public transportation or an ambulance. If you prefer to chauffeur yourself, you can deduct 19 cents per mile for medical travel in 2016. Gas, tolls and parking are also deductible expenses.
You must itemize
In order to claim your medical and dental expenses, you must itemize your deductions. When you do your taxes with ezTaxReturn, we make claiming your expenses easy as 1-2-3. Just answer our simple questions and we’ll complete the appropriate forms.