Before we get started here, a warning: there are more mysteries, trick questions, trap doors and blind alleys in this process than anyone can possibly anticipate. If it weren’t so important, it would be British sitcom silly, too absurd to be real. Going ahead despite the odds demands discipline, steely resolve, total focus and Bruce Willis persistence. Are we taking on the challenge of world peace? global warming? the meaning of life? Oh, no. We’re simply trying to write off some medical expenses on our taxes.
If you’re taking care of your elderly dad, for example, you know how it all adds up. Despite Medicare, there are thousands of dollars each year in medical expenses not covered by anyone but you and your wallet. Then there are lots of little things – parking fees, the gas used to get to appointments, snacks and reading material while you wait for a consult, maybe even some special equipment for the car. You might – just might – be able to deduct some of these expenses from your tax bill. Granted, you will need to have a whole bunch of expenses for it to work, but it’s most definitely worth considering.
One noted expert on the US tax code, Mark Luscombe, CPA, JD, LLM and Federal Tax Analyst at CCH (cchgroup.com) puts it this way: “There are a number of hurdles that must be overcome for a caregiver to deduct medical expenses for the person to whom the care is provided….The person receiving the care must meet certain support, income, relationship, citizenship and other tests. The medical expenses must be of the type approved by the IRS as qualifying for the medical expense deduction.” And that’s just the beginning.
There is also a formula to satisfy. In order to qualify for the deduction, the total amount of the unreimbursed medical expenses must be greater than 7.5% of your adjusted gross income. An example would be if your adjusted gross income is $60,000 – the first $4,500 worth of unreimbursed medical expenses does not count.
You will find a complete treatment of all the whys and hows of deductible medical expenses in IRS Publication 502: Medical and Dental Expenses. In the meantime, here is a list of medical expenses you can deduct:
- Adapters to television sets and telephones for the hearing impaired
- Artificial limb
- Braille books and magazines
- Improvement to your home to accommodate a disability
- Car – cost of special equipment to a disable person can drive
- Contact lenses and supplies
- Dental care
- Diagnostic devices
- Prescription drugs
- Eye surgery
- Hearing aids
- In-home health care
- Insurance premiums, co-pays and deductibles for health insurance, dental and vision insurance and long-term care insurance
- Lifetime care fees (percentage of fees paid under lifetime contract with a continuing care retirement community)
- Long-term care services
- Meals, while staying in a hospital or similar facility
- Medicare Part B premiums
- Nursing home and assisted living costs
- Nursing services
- Prescription drugs and medicine (though not from Canadian and foreign pharmacies)
- Psychiatric care
- Stop smoking program
- Transportation to receive medical care – mileage, parking, tolls
- Weight loss program (if part of treatment for a specific disease)
- Wig (if hair lost due to medical treatment or condition)