In a totally fair and just world, medical expenses wouldn't carry dire consequences. Outstanding medical bills wouldn't affect our credit score. We wouldn't have to figure out if there was some way to deduct them from our income to get a tax break. Unfortunately, that's not yet the case. Many Americans are forced to wonder, come tax time, if it's possible to get a little relief from their medical bills by writing off the costs of care or prevention.
Like so many responses to IRS tax code questions, the answer is an emphatic ... kind of. But don't throw your hands up in frustration and call it a day. While figuring your taxes might seem overwhelming, the rules are in plain sight; you just have to know where to look. Let's sleuth around for some breaks that might work for you.
First off, medical expenses are not deductible if you elect to take the standard deduction. The standard deduction is one of two options you get when filing your taxes: You can either take a predetermined amount the government has designated for a person of your filing status (called a standard deduction), or you can itemize your deductions. Itemizing means that you carefully tally a host of deductions -- your mortgage interest, your professional expenses and your charitable contributions, to name a few -- to come up with an amount you subtract from your taxable income. If you do itemize your deductions, you can deduct medical expenses.
But wait -- here we come with an exception. You can only deduct the amount of medical expenses that exceed 10 percent of your adjusted gross income -- or 7.5 percent of your AGI, if you or your spouse is 65 or older [source: IRS]. So if your AGI is $50,000, you can only deduct your medical bills after they exceed $5,000. You can include the cost of insurance premiums, but only the parts you pay yourself, not those that your employer covers.
Here's another exception: If you're self-employed, you can deduct the entire cost of your premiums without even having to itemize. In other words, you can take the standard deduction and still deduct your insurance costs as an adjustment to income. Which, yes, is exactly what we told you couldn't be done. Forgive us.
So medical expenses can be tax deductible in a few different cases. If you're itemizing, you can deduct a certain percentage of your costs. If you're self-employed, you might be able to deduct medical premiums even without that pesky itemizing. In either case, you'll want to visit IRS.gov for a detailed list of eligible expenses.