Medical Deduction Explained

We have received some questions about medical expenses lately, so this week we would like to go over deducting medical expenses.  Generally, medical expenses are subject to over 7.5% of your Adjusted Gross Income.  In English that means that your medical expenses are only deductible if they are over 7.5% of what you earn in a year.  For example, if you earned $50,000 your medical expense would have to be over $3750.  So if you paid $5000 in medical expenses you can only deduct $1250.

Let’s take a look at some of the things that are deductible. They include: prescriptions medications, doctors, dentists, medical examinations, medical tests, nursing care, hospital expenses, special treatment programs, medical aids, corrective surgery, certain lodging and travel expenses such as mileage to and from any of the above places.

There is one more thing that is deductible but a little confusing and that is health insurance premiums.  Today there are many ways that insurance premiums are paid: HSA, cafeteria plan, employer paid, self-employed pay, just to name a few.  If you are an employee, you may deduct only the premiums you pay after taxes.  Anything pre-taxed are not deductible.  If you are self-employed or have a S Corp or LLC and you pay your own insurance premiums you can deduct these premiums without the 7.5% limitation.  (they are 100% deductible)  It doesn’t matter if the company pays the premiums or you pay them personally because they are deducted the same on your personal tax return.

There are many things that are not deductible. They include: the cost of diet food, elective cosmetic surgery, life insurance, Medicare taxes paid from your pay check or from self employment, nursing care for healthy babies, illegal operations or drugs, imported drugs that are not FDA approved, foreign versions of drugs, non-prescription medications , travel your doctor told you to take for rest or relaxation, funeral, burial or cremation costs.

Often people don’t try to deduct their medical because they don’t think they have enough to deduct.  We have found, however, that often if people take the time to keep track of all the things that are deductible they actually do have enough to deduct them on their taxes.

For more detail information about medical deductions go to