Medical expenses can take a bite out of your budget, especially if you have unforeseen emergencies that are not fully covered by your insurance. The Internal Revenue Service allows taxpayers some relief, making some of these expenses partly tax-deductible. To take advantage of this tax deduction, you need to know what counts as a medical expense and how to claim the deduction.
Deduction value for medical expenses
In 2020, the IRS allows all taxpayers to deduct the total qualified unreimbursed medical care expenses for the year that exceeds 7.5% of their adjusted gross income.
Your adjusted gross income (AGI) is your taxable income minus any adjustments to income such as contributions to a traditional IRA and student loan interest.Your resource on tax filingTax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.Go Now
For example, if you have an adjusted gross income of $45,000 and $5,475 of medical expenses, you would multiply $45,000 by 0.1 (10 percent) to find that only expenses exceeding $4,500 can be deducted. This leaves you with a medical expense deduction of $975 (5,475 – 4,500).
Which medical expenses are deductible?
The IRS allows you to deduct preventative care, treatment, surgeries and dental and vision care as qualifying medical expenses. You can also deduct visits to psychologists and psychiatrists. Prescription medications and appliances such as glasses, contacts, false teeth and hearing aids are also deductible.
The IRS also lets you deduct the expenses that you pay to travel for medical care such as mileage on your car, bus fare and parking fees.
What’s not deductible?
Any medical expenses for which you are reimbursed, such as by your insurance or employer, cannot be deducted. In addition, the IRS generally disallows expenses for cosmetic procedures. You cannot deduct the cost of non-prescription drugs (except insulin) or other purchases for general health such as toothpaste, health club dues, vitamins or diet food, non-prescription nicotine products or medical expenses paid in a different year.
Claiming the medical expenses deduction
To claim the medical expenses deduction, you must itemize your deductions. Itemizing requires that you not take the standard deduction, so you should only claim the medical expenses deduction if your itemized deductions are greater than your standard deduction (TurboTax will do this calculation for you).
If you elect to itemize, you must use IRS Form 1040 to file your taxes and attach Schedule A.
- On Schedule A, report the total medical expenses you paid during the year on line 1 and your adjusted gross income (from your Form 1040) on line 2.
- Enter 7.5% of your adjusted gross income on line 3.
- Enter the difference between your expenses and 7.5% of your adjusted gross income on line 4.
- The resulting amount on line 4 will be subtracted from your adjusted gross income to reduce your taxable income for the year.
- If this amount, plus any other itemized deductions you claim, is less than your standard deduction, you should not itemize.
Remember, TurboTax will ask you simple questions about your expenses, tell you which deductions you qualify for, and fill in all the right forms for you.
For more tax tips in 5 minutes or less, subscribe to the Turbo Tips podcast on Apple Podcasts, Spotify and iHeartRadio
Brought to you by TurboTax.com
- health care
- Intuit TurboTax
- medical expenses
- medical expenses tax deduction
- tax deductions
- tax tips
- tax tools
- TurboTax
More From TurboTax:
- Capital gains and losses
- Can I claim medical expenses on my taxes?
- 5 Things You Should Know about Capital Gains Tax
Stimulus 2020: Unemployment Insurance for Self-Employed IndividualsDue to the recent coronavirus pandemic, many businesses and individuals are facing challenging times — including those that are self-employed. The government has issued unemployment insurance for self-employed individuals to help them manage their finances.Read More
Brought to you byTurboTax.com
Great Ways to Get Charitable Tax DeductionsGenerally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.Read MoreBrought to you byTurboTax.com
Managing Your Retirement Account and Taxes During Economic UncertaintyIn times of economic uncertainty, you might start to notice some alarming changes to your retirement account. It’s usually unwise to panic and withdraw early, even if the temptation is strong.Read MoreBrought to you byTurboTax.com
Are Contributions to School District Programs Tax Deductible?The IRS allows you to claim a deduction for the donations you make to qualified organizations. These organizations include more than just charities and will include any school district program that does not operate for profit and is solely supported by state and local governments.Read MoreBrought to you byTurboTax.com
.
.
Subscribe to PFTGI: https://bit.ly/2Gxn731 Get More PFTGI: http://www.painlessfinancialtrainingg… Online Bookstore: https://www.painlessfinancialuniversi… Online Courses: http://www.painlessfinanciallearning…. Social: https://bit.ly/2EdgXPH Governance: http://www.basicboardgovernance.ca/