Your medical expenses may save you money at tax time, but a few key rules apply. Here are some tax tips to help you determine if you can deduct medical and dental expenses on your tax return:
Itemize. You can only claim your medical expenses that you paid for in 2015 if you itemize deductions on your federal tax return.
Income. Include all qualified medical costs that you paid for during the year, however, you only realize a tax benefit when your total amount is more than 10 percent of your adjusted gross income. The amount you can deduct is the amount that exceeds 10% of your AGI.
Temporary Threshold for Age 65. If you or your spouse is age 65 or older, then it’s 7.5 percent of your adjusted gross income. This exception applies through Dec. 31, 2016.
Qualifying Expenses. You can include most medical and dental costs that you paid for yourself, your spouse and your dependents including:
The costs of diagnosing, treating, easing or preventing disease.
The costs you pay for prescription drugs and insulin.
The costs you pay for insurance premiums for policies that cover medical care qualify.
Some long-term care insurance costs.
Exceptions and special rules apply. Costs reimbursed by insurance or other sources, such as your employer, normally do not qualify for a deduction. For more examples of costs you can and can’t deduct, see IRS Publication 502, Medical and Dental Expenses.
Travel Costs Count. In addition to being able to claim a tax deduction for medical expenses, you may be able to deduct travel costs you pay for medical care. This includes costs such as public transportation, ambulance service, tolls and parking fees. If you use your car, you can deduct either the actual costs or the standard mileage rate for medical travel. The rate is 23 cents per mile for 2015.
No Double Benefit. You can’t claim a tax deduction for medical expenses paid with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from those plans are usually tax-free.
In our experience, a large number of taxpayers do not have enough medical expenses to claim as a deduction on their return. Having medical expenses exceed 10% of income usually signals large medical bills such as the event of chronic illness, expensive prescriptions, or a hospital stay. Contact us today to have your taxes prepared by a Dallas CPA.
