Like most people, I don’t want to pay more taxes than necessary. That common-sense approach to money began when I got my first job at the age of 13. I was paid $1.50/hour, slightly above the $1.30 minimum wage. I calculated exactly how much my first paycheck would be. But when I got it, somebody must have used new math, because the check was less than it was supposed to be. Why? My boss calmly explained, “We have to withhold federal income taxes.”
Now, many years and many paychecks later, I’ve learned to look for every legitimate tax deduction available to me. For retirees who itemize on Schedule A, medical expenses are a great place to look for deductions. You can deduct qualifying medical expenses that exceed 7.5% of adjusted gross income. Here are some specifics.
Long Term Care
If you or your spouse requires long-term care—in-home, assisted living, or nursing home services—any unreimbursed costs may be deductible. The care must be medically necessary for a chronically ill person, which is defined as needing assistance with at least two of the 6 Activities of Daily Living (ADLs):
- Getting Dressed
Persons needing long-term care because of dementia or other cognitive impairment is also considered chronically ill if they need substantial supervision to protect their health and safety. The chronic status has to be certified by a licensed healthcare practitioner.
Long Term Care Insurance
If you bought a long-term care insurance policy, a portion of your premium is considered a medical expense. For 2021 the IRS maximum per-person deduction is:
- 40 or younger $ 450
- 41-50 $ 850
- 51-60 $1,690
- 61-70 $4,520
- 71 and older $5,640
In addition, at least 31 states provide a deduction for long-term care premiums.
If you use a DNA ancestry company for genetic health testing, the portion of the collection kit’s cost that pertains to the genetic testing may be considered a qualified medical expense.
The visually impaired and others with physical disabilities who require the help of a service dog will have qualified medical expenses:
- Buying the dog
- Training the dog
- Veterinary expenses (maintenance of the animal)
Deductible additions or improvements to your home necessary to accommodate a disability or physical condition might include:
- Wide doorways inside the home
- Wide entrances outside the home
- Wheelchair lifts
Elevators are generally not deductible because they add value to your house.
Weight Reduction Programs
For a weight loss program to be deductible, it has to be ordered by a doctor and must treat obesity, hypertension, or alleviate another ailment. Weight loss just to look better is not a qualified medical expense. And the IRS will not let you deduct the cost of diet foods, weight loss supplements, or reduced-calorie beverages.
Self-Employed Health insurance premiums
If you’re self-employed and your business made a profit, you may be able to claim as a business expense anything you paid for health insurance premiums, including Medicare. According to IRS Publication 325, “You may be able to deduct the amount you paid for medical and dental insurance and qualified long-term care insurance for yourself, your spouse, and your dependents. Medicare premiums you voluntarily pay to obtain insurance in your name that is similar to qualifying private health insurance can be used to figure the deduction.”
Other possible medical expenses include:
- Payments to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists and other medical practitioners
- Hospital and nursing home care
- Addiction programs, including smoking cessation
- Insulin and prescription drugs
- Admission and transportation to medical conferences about diseases that you, your spouse, or your dependents have (but meals and lodging don’t count)
- Dentures, reading or prescription eyeglasses, contacts, hearing aids, crutches, wheelchairs, and service animals
- Transportation costs to and from medical care (mileage, tolls, and parking)
- Medicare Part B & D premiums, Medicare Advantage, and Medicare supplement premiums
- Mental health services
IRS Publication 502 has the full list of medical expense deductions.
As my dad used to say, “If it’s in the IRS code and you can use it, do it.” That’s pretty sage advice.
This article is presented as information only and should not be considered as tax or legal advice.