Tax filing checklist to help complete your 2017 tax return
Most tax statements should be at least on their way today

Maximizing the many medical expenses that are still tax deductible

Yelena_Slesarenko_high-jump-2007_photo-by-Bjarteh_Wikimedia-Commons
Many medical costs are still tax deductible, but you have to clear an adjusted gross income bar. (Photo by Bjarteh via Wikipedia)

If you're still young, which to me is an ever-shifting definition that now includes folks in their 40s, here's a warning. Get ready to see more doctors as you age.

I know of what I blog. Although I'm young at heart, I'm finally there. My morning was full of physicians. And I'll deal with doctors again in a few weeks, both for follow-up exams and when I file my 2017 tax return.

Tax breaks for medical costs: Taxes is one of the few positive things about increased medical expenses. (Good test results are the other, but this is a tax, not medical, blog.)

The hubby and I have always itemized instead of claiming the standard deduction, primarily because we've been home owners all our years together.

This year, those house-related Schedule A write-offs, which for the 2017 tax year won't face the new tax law limits, are getting company. Thanks to some unexpected medical issues last year (that's what my opening warned all y'all about), our filing this year likely will provide us our largest itemized deduction amount ever.

Or least I'm going to do my best to attain that designation.

In addition to the copays for visits to and tests conducted by doctors and their myriad medical colleagues, last year we paid a large portion of our medical insurance out of our own pocket.

If you're eyes are lighting up, put on some shades.

This isn't the premium that comes out of your paycheck to cover the employee portion of your employer-provided health insurance. Those premiums typically are paid with pre-tax dollars, meaning that they come out of your wages before your boss calculates the taxes you owe. If you got to deduct them, that would be double-dipping, something the Internal Revenue Service definitely doesn't allow.

You can only deduct those premiums, according to IRS Publication 502, if your employer included your portion of health care premiums in Box 1 (Gross Wages) of your W-2. But that rarely is the case.

Then there were the surgeries (yes, plural), for which the insurance picked up much, but not all, of the costs.

And don't forget follow-up visits and referrals to medical specialists (just to be sure) and, of course, the associated prescriptions. There always are pills, lots and lots of pills.

Only if enough: So we're expecting we'll easily clear the medical deduction adjusted gross income (AGI) threshold, especially since the Tax Cuts and Jobs Act changes included a lowering of that AGI bar from 10 percent to 7.5 percent for the 2017 tax year retroactively, as well as for 2018. (It goes back to 10 percent in 2019.)

Note that the percentage means that not every cent on allowable medical expenses is deductible. You can only count the amount that exceeds the AGI threshold.

So, for example, if your AGI is $50,000 you need more than $3,750 in medical costs for them to be of any tax deduction value.

In this case, if you had $4,000 eligible medical expenses, you could claim $250.

But if you had $3,700 you couldn't claim anything. 

Totaling medical travel: That AGI threshold is why it's worth looking for every medical expense you can count, especially if you're close to your threshold number.

This filing season, I'm not happy with just getting over this year's lowered AGI bar. I'm looking to achieve an Olympian level clearance of that 7.5 percent hurdle (yes, I'm mixing my track and field metaphors).

So that means adding up every single allowable medical expense we can claim.

One of the biggies for me will the addition of travel costs, both to doctors' offices and hospitals, but also to pick up that previously mentioned plethora of prescriptions. The Internal Revenue Service says in Publication 502 that deductible expenses include:

"Payments for transportation primarily for and essential to medical care that qualify as medical expenses, such as payments of the actual fare for a taxi, bus, train, ambulance, or for transportation by personal car, the amount of your actual out-of-pocket expenses such as for gas and oil, or the amount of the standard mileage rate for medical expenses, plus the cost of tolls and parking."

Instead of the actual auto expenses, I'm probably going to go with standard medical mileage rate, which for 2017 is 17 cents a mile. It goes up a cent for 2018 medical miles.

In addition, if I attend a medical conference dealing with my particular medical issue, I can count admission and transportation costs to that event. Such expenses also are deductible when the conference deals with a chronic illness suffered by your spouse or a dependent. Meals and lodging costs while at there, however, are not deductible.

Many more medical costs: I'm also going to use IRS Publication 502 as my guide for other possible amounts I can include on Schedule A.

Here's just a sampling of some of the eligible medical expenses in that document:

  • Out-of-pocket fees to doctors, dentists, chiropractors, psychiatrists, psychologists, podiatrists and other medical professionals that are not covered by Medicare or other health insurance
  • Premiums for long-term care insurance and payments to nursing homes and other long-term care facilities
  • Inpatient alcohol and drug treatment programs
  • Weight-loss programs that are recommended by your doctor to reduce the health risks of obesity or hypertension
  • Wheelchair ramps and other modifications you make to your home for medical reasons
  • Copays for physical or occupational therapists
  • Payments for dentures, prescription eyeglasses or readers, hearing aids, crutches, wheelchairs or other durable medical equipment
  • Payments for smoking-cessation programs and weight-loss programs related to a specific disease diagnosed by a doctor, including obesity
  • Laser vision corrective surgery
  • Other medically-necessary costs prescribed by a physician, such as adding a humidifier to your home's heating and air-conditioning system to relieve chronic breathing problems

You can find the full alphabetical list of deductible medical expenses — from acupuncture through oxygen and ending with X-ray (I'm still searching for a tax-allowable medical cost that starts with Z aside from Zyrtek, which falls in the prescriptions category) — in Publication 502.

Or if you don't want to browse its 27 pages, you can use the IRS' interactive see Can I Deduct My Medical and Dental Expenses? online tool.

If you're there with me with increasing medical costs, I hope this helps with potential tax deductions.

More so, though, I hope you're so healthy and for as long as possible so that you don't need to claim any of these.

You also might find these items of interest:

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Comments

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Kay Bell

Glen, thanks for sharing your good tax news. Glad I could help. Kay

Glen

Kay - Thank you so much for this post. I have never been able to claim Medical Itemized Deductions in the past. After reading your article I started to put together our expenses this year as we had more than usual medical and dental expenses, and whoa,--- I was able to claim an additional $690 refund!!!

Glen

Kay - PS - The excess contributions were into a HSA

Glen

Kay - I had excess contributions to a HSA several years ago when I retired midyear 2015 and paid the $25 extra tax.. In 2016 I paid another $25 tax on the $415 excess contribution, but then withdrew the $415 plus $2 on the earnings on 1/18/17. Will I still owe the 6% on the $415 for the 2017 return or do I clear these account out for excess contribution in 2018? Thanks in advance for your thoughts...Glen

Kay Bell

Jarrett, no you can't since those FSA funds were pre-tax. This would be double-dipping, i.e., getting twice the tax benefit on the same dollars, and the IRS doesn't allow that.

Jarrett

Can you deduct medical expenses if paid with a Flexible Spending Account?

Kay Bell

As for vision expenses, routine eye exams count as medical expenses, as do the cost of eyeglasses and/or contact lenses that such exams find you need. Laser corrective eye surgery also counts. You even can count the cost of equipment and materials required for using contact lenses, such as saline solution and enzyme cleaner. Basically, as long as the eyewear/treatment is needed to correct your vision, it's allowable.

Kay Bell

Glen, medical expenses for Schedule A purposes include dental expenses. Specifically, Pub. 502 says: "You can include in medical expenses the amounts you pay for the prevention and alleviation of dental disease. Preventive treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, the application of sealants, and fluoride treatments to prevent tooth decay. Treatment to alleviate dental disease includes services of a dentist for procedures such as X-rays, fillings, braces, extractions, dentures, and other dental ailments." But things that are purely cosmetic, either dental or full plastic surgery wise, are not deductible. Kay

Glen

Kay - what about expenses related to dental and eye care?

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