The medical expense deduction

You can deduct medical expenses that exceed 7.5% of your AGI if you itemize

Derek Silva

Derek Silva

Published January 17, 2020

info
Advertising Disclosure

KEY TAKEAWAYS

  • Only people who itemize deductions can claim the medical expense deduction

  • For 2019 and 2020, you can deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI)

  • Health insurance premiums are deductible if you paid them out of pocket with post-tax money

The medical expense deduction allows you to deduct certain out-of-pocket medical and dental expenses on your annual tax return. You can only claim expenses that you paid during the tax year, and you can only deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI) in 2019 or 2020. So if your AGI is $50,000, then you can claim the deduction for the amount of medical expenses that exceed $3,750.

Only taxpayers who itemize their deductions, using Schedule A of Form 1040, can claim the medical expense deduction. Itemizing is only an option if your total deductions are worth more than the standard deduction — $12,200 for single tax filers ($12,400 in 2020) and $24,400 for joint filers ($24,800 in 2020).

Deductible medical expenses generally include costs and payments for medically necessary care and services. Common expenses that count are prescription drugs, eyeglasses, and insulin. You can also deduct premiums for health insurance, as long as you paid them with pretax money.

You cannot deduct nonprescription drugs or nonessential services. You also can’t deduct funeral and burial costs, which would be better covered by a life insurance death benefit, although life insurance premiums are not deductible, either.

In this article:

Who can claim the medical expense deduction

You can only claim the medical expense deduction if you itemize your deductions on your tax return. That means you need to have total deductions that are worth more than the standard deduction. Most people are not eligible to itemize after the 2017 tax reform increased standard deductions.

Your filing status determines your standard deduction. The 2019 standard deductions are:

  • $12,200 if you file as single or married filing separately
  • $24,400 for married couples who file a joint return
  • $18,350 for a head of household

The 2020 standard deductions are:

  • $12,400 if you file as single or married filing separately
  • $24,800 for married couples who file a joint return
  • $18,650 for a head of household

If your combined tax deductions, including the medical expense deduction, are less than or equal to the standard deduction for your filing status, then you’ll claim the standard deduction.

Other itemized deductions that you may be able to claim include the mortgage interest deduction, the state and local tax (SALT) deduction, and deductions for charitable contributions.

Self-employed people may qualify to take the deduction if they had a net profit for the year.

Tax Day is July 15th.

Learn how to file your taxes before Tax Day with the five-day Policygenius Tax Bootcamp. It's free!

Policygenius Image

Medical expenses for dependents

You can include medical expenses that you made for dependents during the tax year. You can include the expenses if the person was your dependent either at the time they received the medical expenses or at the time you paid the expenses. So if your parent received long-term care and then became your dependent such that you had to pay the medical bills, you can claim the long-term care costs on your tax return.

The information above also applies to a deceased spouse. You can claim medical expenses you paid for a deceased spouse whether you paid before or after their death.

There are also some instances where you can include expenses for nondependents. If you’re divorced and your ex-spouse claims your children as dependents, you can still include any medical expenses you made for the child.

You can also claim expenses for individuals who would qualify as your dependent except that they file a joint return or have a gross income of more than $4,150 in the tax year. These two things disqualify the person from counting as a dependent on your return, but you can still count medical expenses you paid for them when figuring the medical expense deduction.

How to calculate your medical expense deduction

You can claim the medical expense tax deduction if your medical expenses exceeded 7.5% of your AGI. If your AGI is $45,000 and you had $12,000 in medical expenses, you can deduct the medical expenses that were higher than $3,375 (7.5% of $45,000) — your full medical expense deduction would be $8,625 ($12,000 minus $3,375).

(The AGI threshold for the medical expense deduction will increase to 10% in 2021.)

You can complete these calculations directly on your tax return, as explained in the next section. Note that if you use an online tax filing service, like TurboTax, it will do the math and calculate your deduction for you.

(Note that this is a below-the-line deduction because it reduces your taxable income after calculating your AGI.)

How to claim the medical expense deduction

Taxpayers need to file Schedule A in order to actually claim the deduction on their taxes. Schedule A of Form 1040, titled Itemized Deductions, is the form everyone must use to itemize deductions.

The top section of Schedule A is where you enter information on your medical expenses. The section has four lines and is labelled Medical and Dental Expenses.

Any digital filing service or tax preparer will do the math and fill out the form for you, but if you’re filing a paper return (like you may do with an amended tax return) the following paragraph is a line-by-line breakdown.

Line 1 is where you enter your total medical expenses for the tax year. Line 2 asks for your AGI. On line 3, multiply your AGI by 7.5%, or 0.075, to find the amount of medical expenses you can’t deduct. Finally, subtract your total expenses (line 1) from line 3. The result goes on line 4. If your medical expenses were less than 7.5% of your AGI, you’ll enter “0” on line 4.

For more help filing your taxes, read our guide to filing a tax return.

What medical expenses can you claim?

You can use the medical expense deduction only for things you paid during the tax year. So if you get a big medical bill in December 2019 bill but don’t pay it until January 2020, you can only claim the expense on your 2020 tax return (which you file in early 2021).

If you only pay part of the bill in 2019, you can only deduct the amount you have already paid. This is important to consider if you have any payment plans for medical expenses.

Don’t forget to exclude expenses for which you received reimbursements. For example, you can’t include health insurance premiums you paid with the premium tax credit .

Medical expenses you can deduct

In general, out-of-pocket expenses are tax-deductible if they were medically necessary.

However, there are many types of expenses you can deduct:

This is not a complete list of deductible expenses, and some of these items may also have limits. For more details on which services you can or cannot deduct, see IRS Publication 502, Medical and Dental Expenses.

Medical expenses you cannot deduct

The costs of optional services, like a gym membership or cosmetic surgery you didn’t medically need, are not eligible. Other expenses you can’t claim include the following:

  • Over-the-counter medicines
  • Gym memberships or dietary supplements, unless medically necessary
  • Toothpaste, toiletries, and other personal use items
  • Nicotine gum or nicotine patches you can get without a prescription
  • Funeral or burial expenses (you may want to consider final expense insurance instead)
  • Most cosmetic surgery, unless medically required
  • Expenses you pay with pre-tax money, such as from a health savings account (HSA) or flexible spending account (FSA)

You cannot deduct payments for life insurance policies, the part of your auto insurance that provides medical insurance coverage for people injured by or in your car, or any Medicare taxes that come out of your wages.

policygeniusSymbolCenter

There are two certainties in life: death and taxes.

Life insurance can help your family settle up with Uncle Sam after you’re gone.