Are Medical Bills Tax Deductible
Medical bills are a significant part of our lives. They can often become a cause of worry for many too.
This is especially true for those recovering from the effects of the worldwide pandemic. Many taxpayers are eager to know if medical bills are tax deductible.
Luckily, if your insurance provider does not completely cover your medical bill, then you may be able to get your taxes reduced.
In this article, we have listed details on getting tax deductions on medical bills, the value of deductions, non-deductible medical expenses, and how to claim a tax deduction on medical bills.
Tax deduction on medical bills
The Internal Revenue Service (IRS) allows a deduction for unreimbursed amounts spent on treatment, preventive care, surgeries, and dental and vision procedures.
Besides, visits to psychiatrists and psychologists are also classified under tax-deductible medical expenses.
Unreimbursed payments for hearing aids, false teeth, glasses, contact lenses, and prescription medications are tax-deductible.
The IRS allows a tax deduction on expenses for medical care traveling, such as parking fees, bus fare or mileage on your car.
Tax deduction value for medical expenses
The total deducible value for medical expenses varies. It depends on your income. The IRS allows taxpayers to deduct unreimbursed medical care expenses that exceed 7.5% of their adjusted gross income.
You can choose to itemize this tax deduction under the IRS Schedule A section.
You can calculate the specific amount for a tax deduction by subtracting the expenses that exceed 7.5% of your adjusted gross income from your total medical expenses.
These include contributions to conventional IRA and deductible student loan interest.
Non tax-deductible medical expenses
Medical expenses that are reimbursed cannot be deducted. This includes reimbursement of medical expenses from your insurance provider or employer.
Besides, the IRS prohibits reimbursement for cosmetic procedure expenses.
Non-prescription drugs, except insulin, are not eligible for tax deductions. Medical expenses must be claimed in the year paid, not when the medical services were provided.
Apart from this, if you use a flexible spending account, or health savings account, to pay medical expenses, then the amount is also non-deductible. This is because the money in such accounts is already tax-advantaged.
Claiming tax deductibles on medical expenses
To claim a tax exemption on medical expenses, you must itemize your deductions. Itemizing involves avoiding the standard deduction.
You should only claim a tax deduction for medical expenses if the itemized deductions are greater than conventional deductions.
If you choose to itemize deductions, you should file your taxes using IRS Form 1040. You will also need to attach Schedule A documents along with Form 1040.
To claim tax deductions for medical expenses, itemize deductions on Schedule A attached to Form 1040, listing total medical expenses and subtracting 7.5% of your adjusted gross income (AGI) to calculate the deductible amount:
- Report all medical expenses for the current year on Line 1 of Schedule A form and add your Adjusted Gross Income from Form 1040 in Line 2 of Schedule A.
- Enter 7.5% of your AGI in Line 3 of Schedule A.
- Next, enter the difference between expenses and 7.5% of AGI in Line 4.
- The resulting amount in Line 4 is then added to other itemized deductions (if any) and then subtracted from your AGI. This reduces your taxable income for the current year.
- If this amount is less than your usual deduction, then you will normally need to itemize your deductions.
Conclusion
If you fulfill the criteria detailed by the IRS, you may have several opportunities to get tax deductions on your medical bills.
To learn additional details on getting tax exemption on medical expenses, you can choose to visit the official IRS website at https://www.irs.gov/help/ita/can-i-deduct-my-medical-and-dental-expenses.
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