Offset Arthritis Costs With Medical Tax Deductions
Knowing what to take off your taxes can save you a bundle.
Do you fear pain in your pocketbook this tax season? You may be able to recoup some of your arthritis costs with medical tax deductions. You can include most medical or dental costs for yourself and family members, including charges for doctor visits, lab fees, therapy sessions, insulin, prescription drugs and medical products, insurance premiums and some long-term care insurance. But if any charge is reimbursed by your insurer or another source, it doesn’t qualify for a deduction.
You can claim some expenses for public transportation and ambulance service. If you use your car for medical travel, the actual charges of out-of-pocket expenses, such as the cost of gas, oil, parking fees and tolls can be deducted or you can use the standard mileage rate of $0.24 per mile. But depreciation, insurance, general repair or maintenance expenses can’t be deducted. The cost of meals and lodging at a hospital or similar institution can be included in medical expenses if a principal reason for being there is to get medical care.
Some alternative treatments, such as acupuncture, are allowed, but supplements are not – unless ordered by a doctor. And although cosmetic surgery typically isn’t deductible, it is when it’s to correct deformities or repair injuries resulting from an accident or disease.
If you were self-employed and had a profit, you may be able to deduct amounts paid for medical and qualified long-term care insurance for yourself, your spouse, your dependents, and, your children who were under age 27 at the end of the calendar year.
It’s a good idea to get a doctor’s note for the charges you plan to claim. It won’t guarantee a deduction will pass muster with the IRS, but it strengthens your case. Also, you can claim medical and dental expenses in the year you paid the charge, regardless of when the services were provided.
Make sure your submission meets these important criteria:
- More than 10%. The expenses that are not covered by your insurer must total more than 10% of your adjusted gross income (AGI). For example: If your AGI is $50,000 for the year, you may deduct out-of-pocket costs in excess of $5,000. You, your spouse and all dependents can bundle expenses to meet this threshold. If you or your spouse is 65 years or older, the rate drops to 7.5% and expenses would only need to be more than $3,750. “Try to bundle expenses from two years into one year so it’s easier to make the threshold,” says Tony Davis, a CPA with LarsonAllen in Minneapolis who specializes in health care. You can claim a charge in the year that you pay it even if you don’t use the service or product until the following year.
- Itemize. You may want to itemize the expenses on your tax return to maximize your deductions.
- For medical uses only. Personal items, such as orthotic shoes, must pass the “but for” test, says IRS spokesperson Michelle Lamishaw, “which means that the taxpayer would not purchase the item but for the medical purpose.” In some cases, only part of the cost can be written off. A home modification may also be deductible, but if it increases your home’s value, such as an elevator, you must discount that increase.
- No double benefit. You can’t claim a tax deduction for expenses you paid with funds from your Health Savings or Flexible Spending Accounts since monies from these plans are usually tax-free. Also if you are a retired public safety officer, you can’t include any health or long-term care premiums that you elected to have paid with tax-free distributions from your retirement plan.
- What Medicare allows. If you’re enrolled in Medicare A, the payroll tax paid for Medicare A doesn't quality as a medical expense. But if you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. In this situation, you can include the premiums you paid for Medicare A as a medical expense. Premiums for Medicare parts B and D are also considered as medical expenses.
For a complete list of deductible medical expenses and more information, check out the IRS Publication 17, Your Federal Income Tax, available online.