You can deduct any medical or dental expenses that you paid for out of your own pocket. This includes medical services for yourself, your spouse, your kids or other dependents. This encompasses "diagnosing, treating, easing or preventing disease," according to the IRS. The cost of prescription drugs is deductible. Any premiums you pay for medical insurance policies are deductible, including long-term care -- if you pay for your own insurance, this is probably what will get you to that AGI threshold. If you're self-employed, you can deduct your insurance premiums under certain circumstances, even if you don't do an itemized return. This deduction actually reduces your AGI, so it works a little differently than the usual medical deduction.
If you had an emergency and were transported in an ambulance, the ambulance cost is deductible. If you have to travel for medical care, such as to a special clinic or a hospital that specializes in your particular medical problem, you can deduct the cost of travel. Even if you just have to drive back and forth to the hospital a lot in your own car, there's a standard mileage deduction of 23.5 cents per mile (for 2014). You can track your actual gas and maintenance costs, but it's usually a lot easier and beneficial to use the standard mileage deduction.
There are some other expenses that can be deducted that you might not expect. If you attend a conference about a chronic condition you or a family member suffers from, travel and conference expenses are deductible (but not lodging and food). Surgery to correct vision problems, eyeglasses, hearing aids and other medical devices (even guide dogs and other assistance animals), and drug and alcohol abuse treatments also fall under allowable tax deductions.
If you need to modify your home in some way because of a medical condition (like a ramp because you can't use stairs or a humidifier to ease asthma), the cost of those home improvements can be counted as medical tax deductions. The catch is that your doctor has to declare that the improvement is necessary. If the modification significantly increases the value of your home, that portion of the expense would not be deductible -- you'd need to talk to a tax expert to determine this case by case.
You can deduct the cost of a weight-loss program, but only if a doctor has declared it a medical necessity that you lose weight. In fact, if your doctor does so, you can deduct the cost of some diet foods and health club dues (which are not ordinarily deductible expenses).
Dealing with addiction is also usually covered, including treatment at an addiction center, smoking cessation programs and nicotine withdrawal treatments that require a prescription.
You can see that, although the AGI threshold makes it difficult to deduct medical expenses if you've earned a lot, many of those expenses add up quickly, especially if you're paying your own insurance premiums. With some careful record-keeping, you can take some of the sting out of the year's medical costs when it's tax time.
Author's Note: How to Report Tax Deductions for Medical Expenses
I spend a lot of time writing about things like dragons and video games and supercars, but surprisingly (to myself, at least), I really enjoy these seemingly dry topics. Maybe it's because there's a chance they'll really help someone understand a daunting topic (and save a few bucks). Maybe it's just nice to come back to Earth now and then. I found this one pretty interesting -- who knew you could deduct home improvements as a medical expense? My sincere hope is that readers never have any interest in this article because they're always healthy and well-insured.
- Bell, Kay. "Maximizing your medical deductions." Bankrate.com. March 10, 2014. (Nov. 19, 2014) http://www.bankrate.com/finance/money-guides/maximizing-your-medical-deductions-2.aspx
- Erb, Kelly Phillips. "Deduct This: The History of the Medical Expenses Deduction." Forbes. June 20, 2011. (Nov. 20, 2014) http://www.forbes.com/sites/kellyphillipserb/2011/06/20/deduct-this-the-history-of-the-medical-expenses-deduction/
- Internal Revenue Service (IRS). "Deducting Medical and Dental Expenses." Feb. 26, 2014. (Nov. 20, 2014) http://www.irs.gov/uac/Newsroom/Deducting-Medical-and-Dental-Expenses
- Internal Revenue Service (IRS). "Itemizing vs. Standard Deduction: Six Tips to Help You Choose." March 10, 2014. (Nov. 20, 2014) http://www.irs.gov/uac/Newsroom/Itemizing-vs-Standard-Deduction-Six-Tips-to-Help-You-Choose
- Internal Revenue Service (IRS). "Topic 502 - Medical and Dental Expenses." Aug. 19, 2014. (Nov. 20, 2014) http://www.irs.gov/taxtopics/tc502.html
- Kennan, Mark. "Does Property Tax and Mortgage Interest Drop Your AGI Dollar for Dollar?" Zacks. (Nov. 20, 2014) http://finance.zacks.com/property-tax-mortgage-interest-drop-agi-dollar-dollar-1300.html