How do major medical expenses affect tax filing? If you or someone in your household has had a condition or illness that has led to major medical expenses, there are some things you may want to be aware of when tax season rolls around.
No one is ever really ready to be struck, or have a loved one struck, by a serious illness. Major medical expenses can be financially crushing, but completely unavoidable since we must make our health our priority. If you or someone in your household has had a condition or illness that has led to major medical expenses, there are some things you may want to be aware of when tax season rolls around.
Medical deductions are a complicated issue in the tax code. According to Brian K. Gilroy, Attorney and CPA, "You're looking at a very specific set of facts and circumstances, because you name a general category, and there are some items in that category deductible, and then some are not deductible."
For example, cosmetic surgery generally cannot be included if it was aimed at improving one's appearance- you cannot deduct costs for whitening your teeth, electrolysis, or liposuction . However, cosmetic surgery to correct a deformity due to a disease or accident can be deducted. You cannot deduct the cost of general diet foods and beverages, however if you require a special food for an illness, it may be deductible if it meets specific guidelines. You can deduct some weight loss or health programs if they are to treat a specific disease (such as diabetes or hypertension), however you cannot deduct such things as dance lessons, swimming lessons or health club fees to improve your general health, even if these things were recommended by a doctor. Prescription drugs, in most cases, are deductible, unless they were purchased in or shipped from a foreign country, which, in most cases, they are not deductible.
Because of the complexity of the specification on various medical expenses, it would be beneficial to consult with a tax professional after suffering from illness or injury resulting in high medical bills. Not only do you not want to get caught trying to deduct something that is not allowed, but you don't want to miss any possible deductions because you misunderstood the tax code.
Even if a medical expense is generally allowed as a deduction, it does not automatically mean that you will get to deduct it. "Medical is an itemized deduction (Schedule A)... and it's only deductible to the amount that is greater than 7.5% of your gross income... Because you have to be over 7.5% of your adjustable gross income, if you make a lot of money they're typically not going to be deductible, but again it depends on how much they are," Mr. Gilroy explains. "When I do people's taxes, very often I'll get a two or three page list of all their visits to a doctor, all their prescription needs. You add up that list, and it comes to two or three thousand dollars- well, if they don't have any other itemized deductions, it's not greater than their standard deductions. The $2,000 is before figuring out how much is above 7.5 % of their adjustable gross income."
Because medical expenses are itemized, be careful in keeping all records pertaining to your health care costs. Receipts, statements- even milage logs for transportation related to medical care. This will ensure that you're getting all the deductions for which you are eligible.
