It's been a crazy couple of months for the hubby and me. In February, we headed to our local hospital's emergency room after he sustained a head injury. A month later, I apparently was too aggressive of a walker, ending up with a fracture of one of my toes.
We're both healing, not as quickly as we'd like, but thankful that things weren't worse.
Good podiatrist news: MRI showed fracture just in one toe joint, not across all upper metatarsals as feared based on swelling (which is down dramatically). Bad news, he wants me to stay in this damn boot for another 2 weeks. pic.twitter.com/KzU1pk9uLC— Kay Bell (@taxtweet) March 28, 2022
We're also grumbling about the medical costs. Medical science is great, but do we really each have to have every test ever invented!?!
The good news is that we have insurance. The bad news is that since it's early in the year, we're still in the meeting our deductible phase.
Naturally, I'm also thinking about the tax aspect of health care. If things continue at the rate they started this year, we might be able to deduct medical costs on our 2022 taxes. And that, of course, prompted today's post on what can be counted on Schedule A as itemized tax-deductible medical costs.
Here are 11 medical expenses that many filers overlook.
1. PPE purchases: The COVID-19 pandemic might not be as virulent as it once was, but the coronavirus is still with us. The BA.2 variant is making the rounds, and the Food and Drug Administration today (March 29) OK'ed second boosters for some individuals. The pandemic also has affected medical expense deductions. The Internal Revenue Service in 2021 approved personal protective equipment (PPE) costs as long as the items were purchased for the primary purpose of preventing the spread of COVID-19. This includes face masks, hand sanitizer and sanitizing wipes. This tax-deduction addition applies to PPE used by the taxpayer, his or her spouse and dependents.
A quick note here for teachers and other school staff. You get special PPE consideration without having to itemize. Certain school employees can claim up to $250 (it's adjusted annually for inflation, going to $300 for the 2022 tax year) that they spend during the tax year to provide their students and classrooms with necessary educational material. In 2021, the IRS ruled that certain COVID-19 protective items purchased for classroom count toward this above-the-line teachers' et al deduction.
2. Out-of-pocket medical fees: Even if you have insurance, you likely must meet a deductible (like I was whining about earlier in this post) before its coverage kicks in fully. The out-of-pocket payments you make to doctors, dentists, chiropractors, psychiatrists, psychologists, podiatrists and other medical professionals while you're working up to your deductible count as deductible medical costs. So do the copayments for prescriptions.
3. Noncovered medical costs: Having medical coverage doesn't mean every health-related situation or cost will be covered (unless you have a really, really good — and expensive — policy). In most cases, there are certain things that it won't cover. However, the IRS says you can deduct these items. They include your payments for dentures, hearing aids, prescription contacts and eyeglasses or reading spectacles, and, if you want a more permanent solution, Laser vision corrective surgery.
4. Adaptive equipment: Assistive devices that help with specific illnesses and disabilities also generally are deductible. This includes the costs of wheelchairs, bath chairs, bedside commodes, and other items needed for a disability or physical condition. Don't forget about hand controls and other special equipment installed in cars for people with disabilities. You also can deduct the amount paid for an artificial limb or prosthetic device.
People who are deaf, hard of hearing, or have a speech disability, can claim the cost of hearing aids (and batteries), as well as special telephone equipment, such as teletypewriter (TTY) and telecommunications device for the deaf (TDD) equipment. Visually impaired or blind individuals can deduct Braille books, along with the cost of programs that teach Braille or lip reading or give language training to correct a condition caused by a congenital disability.
Service animal expenses also can be claimed. You can count as medical expenses the costs of buying, training, and maintaining a guide dog or other service animal for a visually impaired or hearing disabled person, or other physical disabilities. In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the animal's health so that it can perform its duties.
5. Medical insurance policy premiums: As for that health care, payments for medical insurance can be deducted as long as you are pay them out of your own pocket with after-tax dollars. This could be the case if where you work doesn't provide health care as a benefit and you buy it on your own. Note, however, that if you then get coverage through the Affordable Care Act marketplace, either the federal one at HealthCare.gov or one of the many state marketplaces, to obtain and qualify for the premium tax credit (PTC) to help you meet your policy's cost, you can't deduct the amount that's also covered by the PTC.
One cost that often runs up the deductible medical premium option is COBRA, the acronym for the Consolidated Omnibus Budget Reconciliation Act of 1985. This law allows former employees to continue the health care they had while working. However, they must pay the full cost, including the amount previously picked up by their bosses. Those hefty payments count as deductible medical expenses.
6. Medical mileage: Getting to and from the doctor also could provide a tax deduction. You can claim 16 cents per mile on your 2021 taxes (it goes up to 18 cents per mile in 2021) for trips to medical treatments (and, in some instances, conferences), as well as when you drive to the pharmacy to pick up your prescriptions. The key here, as in all tax situations, is to keep thorough medical mileage records.
7. Medicare and supplemental policies: Premiums for traditional Medicare Part B, which covers most general medical treatments, and Part D, prescription drug coverage, are deductible, along with any Medigap, or supplemental Plan G, coverage are tax deductible. If you opt for Part C, an Advantage plan, instead of traditional Medicare, that cost also can be deducted. However, Medicare Part A, the basic hospital coverage, isn't tax deductible if Social Security pays these premiums, which typically is the case.
8. Long-term care policy premiums: Longer life spans have prompted many to purchase long-term care (LTC) insurances. A portion of those policy premiums is tax deductible.
Just how much of your LTC premiums you can claim on Schedule A are based on your age and are adjusted annually for inflation. For 2020, the deductible amounts by age range as noted in the instructions for Schedule A are:
- $450 if you're 40 or younger
- $850 if you're age 41 to 50
- $1,690 if you're age 51 to 60
- $4,520 if you're age 61 to 70
- $5,640 if you're age 71 or older
9. Special treatments: Inpatient alcohol and drug treatment programs, as well as weight-loss programs that are recommended by your doctor to reduce the health risks of obesity or hypertension are deductible. Programs to help you kick your nicotine habit also could be tax deductible, again as long as your doctor diagnoses a medical condition that could be remedied in part by your stopping smoking.
10. Residential health-related changes: Wheelchair ramps and other modifications you make to your home for medical reasons also are deductible. So are other medically-necessary changes, prescribed by a physician, such as adding a humidifier to your home's heating and air-conditioning system to relieve chronic breathing problems. Even a swimming pool or water feature could — and I emphasize could — be claimed if your doctor determines pool workouts or spa or hot tub treatments will alleviate or prevent your ailment. This means the costs, per your physicians' decision (and spelled out in IRS Publication 502), are necessary for the "diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body."
11. Not-just-cosmetic costs: It's well-known that plastic surgery generally is not an allowable medical deduction. In some cases, though, cosmetic surgery costs can count. This is the case for individuals who pay for breast reconstruction surgery, as well as breast prosthesis, following a mastectomy for cancer. On a less invasive level, you also can include in medical expenses the cost of a wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his or her hair as the result of a disease.
Claiming rules, cost thresholds: Now that you have all these items on your tax break list, how do you claim them?
As noted, you must itemize. That's filling out the top section of the previously mentioned Form 1040 Schedule A, excerpted below.
The costs also must come to more than 7.5 percent of your adjusted gross income (AGI). For example, if your AGI is $75,000, you'll need costs exceeding $5,625. And only the excess amount counts.
So if you have $5,650 in medical expenses, you can claim just the $25 that's more than your percentage threshold.
That 7.5 percent deduction hurdle is why it's important to make the most of your allowable medical expenses.
But don't try to push the eligibility limit. Note that in many of the deductible instances cited in this post, you must have a doctor's recommendation in order to claim the costs. And again, keep good records, of your medical requirements and the costs.
More medical tax info: If you have a health care cost that's not listed here, check out all the medically deductible tax possibilities. They're listed alphabetically in IRS Publication 502, from acupuncture to X-ray. I'm still searching for a tax-allowable medical cost that starts with Z aside from Zyrtec, which falls in the prescriptions category.
If you don't want to browse its 28 pages, use instead the IRS' interactive see Can I Deduct My Medical and Dental Expenses? online tool.
You just might find itemizing medicals costs is the best tax Rx.
You also might find these items of interest:
- 3 medical tax breaks prompted by COVID-19
- Bunching your expenses to make tax itemizing worthwhile
- Ways to spend tax-favored FSA money if you're facing 3/15 (or later) deadline