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If you’re spending significant money on healthcare because of chronic conditions, the IRS might owe you money back. Medical expense deductions can add up to serious tax savings, especially when you know which expenses qualify and how to document everything properly. The key is understanding that way more things count as medical expenses than most people realize.
25 Medical Expenses That Count (More Than You Think)
- Doctor visits and specialist appointments
- Prescription medications and medical devices
- Hospital bills and surgery costs
- Physical therapy and rehabilitation services
- Medical insurance premiums (when not payroll-deducted)
- Mileage to medical appointments (22 cents per mile in 2023)
- Parking fees at medical facilities
- Taxi or rideshare costs for medical appointments
- Travel expenses for out-of-town medical care
- Lodging costs when traveling for medical treatment
- Blood pressure monitors and diabetic supplies
- Wheelchairs, walkers, and mobility aids
- Special mattresses prescribed for medical conditions
- Air purifiers prescribed for respiratory conditions
- Compression stockings and medical garments
- Acupuncture and chiropractic treatments
- Massage therapy when medically necessary
- Mental health counseling and therapy
- Smoking cessation programs
- Weight loss programs for specific medical conditions
- Guide dogs and service animals
- Wigs for chemotherapy patients
- Home modifications like ramps and grab bars
- Swimming pool maintenance for prescribed aquatic therapy
- Special school costs for children with learning disabilities
The 7.5% Threshold Rule
You can only deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI). If your AGI is $50,000, you need more than $3,750 in medical expenses before you can start deducting anything.
This threshold makes medical deductions more valuable for people with chronic conditions who have ongoing, significant medical expenses. If you’re spending $8,000 annually on medical care with a $50,000 income, you can deduct $4,250.
The good news is that all qualifying medical expenses for you, your spouse, and dependents count toward reaching this threshold. Family medical expenses can combine to push you over the limit.
Documentation That Saves You Money
Keep every medical receipt, no matter how small. Those $15 prescription copays and $25 physical therapy copays add up to hundreds or thousands of dollars over a year.
Track medical mileage in a simple log with dates, destinations, and miles driven. Most people underestimate how much they drive for medical care – routine appointments, pharmacy visits, and medical equipment pickups all count.
Save insurance explanation of benefits (EOB) statements that show what you paid out-of-pocket. These documents provide official records of your medical expenses for tax purposes.
The IRS Publication 502 provides the complete list of qualifying medical expenses and documentation requirements.
Get written prescriptions for unusual medical expenses like special diets, exercise programs, or home modifications. Having a doctor’s prescription turns ordinary expenses into deductible medical costs.
HSA and FSA Strategy
Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) use pre-tax dollars for medical expenses, which is often better than taking deductions. You avoid paying taxes on the money entirely rather than getting deductions later.
If you have both HSA/FSA funds and expect to itemize deductions, use your HSA/FSA money for expenses that wouldn’t otherwise be deductible, and pay out-of-pocket for clearly deductible expenses.
HSA funds never expire and can be used for medical expenses in retirement, making them valuable long-term planning tools for people with chronic conditions.
Timing Your Medical Expenses
Consider timing elective medical procedures and expenses to maximize your deduction potential. If you’re close to the 7.5% threshold, bunching medical expenses into one tax year might push you over the limit.
December and January timing can be strategic. Pay outstanding medical bills in December if you’re close to the threshold, or wait until January if you won’t reach the limit this year but might next year.
Prescription refills, medical equipment purchases, and routine procedures can sometimes be timed to optimize your deduction potential without compromising your health.
State Tax Benefits
Some states have more generous medical expense deduction rules than federal taxes. Check your state’s tax rules – you might qualify for state deductions even if your medical expenses don’t exceed the federal threshold.
A few states allow medical expense deductions without the 7.5% AGI threshold, making smaller medical expenses deductible at the state level.
Long-Term Care Considerations
Long-term care insurance premiums are deductible medical expenses with age-based limits. For people over 70, you can deduct up to $5,880 in long-term care premiums in 2023.
Home care services for chronic conditions often qualify as medical expenses when they include skilled nursing or therapy services, not just personal care assistance.
Adult day care programs that provide medical services can be partially deductible medical expenses, particularly for people with conditions like dementia or disabilities.
Common Mistakes to Avoid
Don’t forget to include medical expenses paid by credit card in the year you charged them, not when you paid the credit card bill. The IRS cares about when you incurred the expense, not when you paid for it.
Over-the-counter medications generally don’t qualify unless prescribed by a doctor. However, medical devices and supplies like bandages, blood pressure monitors, and diabetic supplies qualify without prescriptions.
Health club memberships and gym fees usually don’t qualify unless specifically prescribed by a doctor for treating a diagnosed medical condition.
Medical expense deductions require itemizing, so make sure your total itemized deductions exceed the standard deduction to make financial sense.
Having chronic conditions creates ongoing medical expenses that can generate significant tax savings when you understand the rules and document everything properly. The key is recognizing that medical expenses extend far beyond obvious healthcare costs and keeping detailed records of everything that qualifies.
