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7 Things You Should Know About Claiming Medical and Dental Expenses on Your Tax Return

7 Things You Should Know About Claiming Medical and Dental Expenses on Your Tax Return

The most overlooked tax deduction for many Americans today is medical and dental expenses. Any individual who has incurred a large amount of medical expenses can itemize their deductions on Schedule A of their tax return. Expenses associated with diagnosis, treatment, prevention, cure, and any medically necessary needs such as supplies and equipment, can be deducted. It is important to understand what the Internal Revenue Service requires from the taxpayer in terms of medical and dental related deductions. Here are tax filing tips for these expenses.

  • Know Your AGI Threshold. Taxpayers can only claim medical and dental expenses that exceed 10% of their adjusted gross income (AGI). Individuals who are age 65 or older, will be able to claim expenses that exceed 7.5% of their AGI until December 31, 2016. Starting with the 2017 year, all taxpayers will have to follow the 10% rule.
  • Applies to all medical expenses not covered by your insurance. If your insurance does not cover specialty doctors such as psychologists, podiatrists, physical therapist, acupuncturist, and chiropractors, then you can also claim these medical expenses as a deduction. It is important to understand that any expenses which are covered by your insurance are not eligible to be calculated as part of your total medical and dental expenses.
  • Assess Additional Medical Costs. Additional costs which you may face include transportation, prescription medications, and long-term care costs. Keep detailed records of all of these expenses including mileage driven. When it comes time to file your taxes, all of these additional expenses can help you reach the proper threshold to claim a deduction for your medical and dental related expenses.
  • HSA is not a medical expense. Many insurance companies and employers today offer a health savings account option to be used towards medical expenses. Depending on the type of insurance that you have, this money may expire at the end of each year. Unfortunately money contributed to your health savings account is not considered a medical expense in the eyes of the IRS.
  • Insurance premiums are not a medical expense. The recent changes in healthcare laws have led some people to believe that the high insurance premiums should also be considered a medical expense, but they are not.
  • Contributions to state disability funds are not a medical expense. Mandated contributions to employment or disability funds required by some states are not considered a medical expense, but they can be claimed as an itemized deduction on Schedule A.
  • Medical expenses of dependents can also be claimed. Anytime you pay medical expenses for a child or spouse, it is considered eligible for a tax deduction. This is especially important if you happen to be divorced but have covered the expenses of a child that were not covered by insurance.

Any unpaid outstanding medical bills will not qualify as part of your deduction total. In order to get the maximum reimbursement for your medical and dental expenses, be sure to have all costs calculated an itemized. The IRS website or a tax professional can guide you in determining the appropriate expense them out for things like mileage. If your overall medical and dental expenses for the year exceed 10% of your adjusted gross income, then this is one tax break that you don’t want to skip out on.

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