Regardless of your income level, the cost of medical care can be staggering. Whether medical expenses are due to an auto or home accident or a chronic or long-term illness, out-of-pocket costs can climb into the tens of thousands of dollars and potentially cripple a household's finances. While the Internal Revenue Service allows individuals to deduct qualifying medical expenses that are not covered or reimbursed by their health insurance company, there are certain rules taxpayers must follow to qualify for a medical expenses tax deduction.

First, taxpayers must itemize their tax deductions to use the medical expense write-off. In addition, the IRS has imposed new qualifying thresholds. For taxpayers planning to itemize medical expenses for the 2016 tax year (which will be filed in 2017), qualifying expenses must exceed 10 percent of their adjusted gross income. The deduction threshold increased from 7.5 percent to the current 10-percent level in 2015. However, taxpayers 65 and older were only required to reach a 7.5-percent threshold for medical expenses through 2016. Starting in 2017, all age brackets are required to meet the new 10-percent adjusted gross income threshold to be able to claim the deduction. It is important to keep all receipts, invoices, and other documentation and add up all medical costs to ensure this threshold is met before filing for a tax deduction.

Qualifying Medical Expenses

Even though not all medical expenses qualify for a tax deduction, many medical and health-related expenses can be claimed for taxpayers, their spouses, and their dependents. These qualifying expenses include:

  • Acupuncture and many other holistic treatments
  • Alcohol or drug treatment
  • Artificial limbs and prosthetics
  • Eyewear, including prescription glasses and contacts
  • False teeth
  • Guide dogs for the blind and deaf
  • Hearing aids
  • Insurance premiums
  • Medical fees
  • Prescriptions
  • Psychiatric care
  • Smoking cessation programs
  • Special education 

Many people also overlook associated health costs that are actually tax deductible. Taxpayers can write off travel expenses to and from medical treatments, uninsured medical treatments, medically necessary costs and treatments prescribed by a physician, and certain medical conference costs. 

Non-Qualifying Medical Expenses

Some expenses that relate to a person's health and well-being but don’t qualify for a tax deduction include:

  • Cosmetic surgery
  • Funeral expenses
  • Gym memberships
  • Life insurance premiums
  • Nonprescription drugs
  • Nutritional supplements 

Taxpayers should consider consulting a tax preparer if they plan to deduct health-related costs. While many people may not think to include contacting their tax preparer when they’re undergoing treatment for a chronic illness, doing so can help them understand the steps they need to take to secure a tax deduction and ensure they have all the correct documentation to do so. 

For a more in-depth look at Liberty Tax Service, visit the Give Me Liberty! magazine, follow Liberty Tax on Facebook and Twitter, contact Liberty Tax directly at 1-877-at-Liberty, or visit a conveniently located Liberty Tax office near you.

Additional resources

Changes to Itemized Deductions for Medical Expenses