As tax season is upon us, it's time to get your financial documents in order, and that includes everything related to last year's medical expenses. With the continually rising costs of medical expenses for the American family, it makes sense to take advantage of as many medical tax breaks as possible, which oftentimes are overlooked.
Over the past three years, medical expenses have increased by 22 percent for the average family of four. This amount has been compared to the cost of one year's tuition and room and board at a four-year university or college.
The infographic below sheds light on the fact that by itemizing medical expenses on your tax return, you may be able to save your family a lot more money than you expected. Here is an overview of some important facts to know when claiming medical benefits and deductions on your taxes.
Medical expenses that can be claimed as tax deductions
You can only claim medical expenses over 10 percent of your adjusted gross income. For example, if your adjusted gross income is $50,000, then you can only claim medical expenses that exceed $5,000. So if your medical expenses for the year were $8,500, then you can only deduct $3,500 on your tax return.
However, for seniors over the age of 65, this figure jumps to 7.5 percent from January 1, 2013, through December 31, 2016.
These are the kinds of medical expenses you can deduct:
- Preventative care and treatments
- Vision and dental care
- Surgeries, including laser eye surgery and medically necessary cosmetic surgery
- Psychological and psychiatric treatment
- Physical therapy
- Chiropractic visits
- Prescription medications
- Drug and alcohol addiction treatment
- Smoking cessation treatment
- Physician-recommended medical equipment or accessories, such as eye glasses, wheelchairs, artificial limbs, dentures, hearing aids, oxygen bottles, and breast pumps
- Fertility treatments such as in vitro fertilization
- Vasectomies
- Mileage (You can deduct mileage for travel to and from doctor's appointments at 23.5 cents per mile, along with parking fees. That really adds up.)
Additional notes
All of the above that is incurred by a spouse or dependent is also tax deductible. Health insurance premiums may also be tax deductible if they are paid for with money that has already been taxed.
When deducting medical expenses on your tax return, it is important to keep accurate records of everything you deduct. Keep copies of all receipts and bills so that if you are ever audited, you can easily access these documents as valid proof of your deductions.
