Personal Finance
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Medical care expenses are amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body. The medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. This section provides details to special issues related to medical care expenses. However, keep in mind, that there are income restrictions limiting the medical deductions.
- Medical Expenses Relating to Adoption
- Medical expense payments made by an adopting parent for medical services rendered to a child even before the child was placed in the parent's home are deductible if the following apply.
- Cosmetic Surgery
- Generally, cosmetic surgery is not a deductible medical expense. Cosmetic surgery is defined as any procedure, which is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease.
- Dependents & Medical Expenses
- Medical Dependents - Medical expenses paid for dependents may be deducted. To claim these expenses, the person must have been a dependent either at the time the medical services were provided, or at the time the expenses were paid.
- Alcoholism & Drug Addiction
- You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for alcohol or drug addiction. This includes meals and lodging provided by the center during treatment.
- Impairment-Related Medical Expenses
- Amounts paid for special equipment installed in the home or for improvements may be included in medical expenses, if their main purpose is medical care for the taxpayer, the spouse, or a dependent. The cost of permanent improvements that increase the value of the property may be partly included as a medical expense. The cost of the improvement is reduced by the increase in the value of the property. The difference is a medical expense. If the value of the property is not increased by the improvement, the entire cost is included as a medical expense.
- Insurance Premiums
- You can include in medical expenses insurance premiums you pay for policies that cover medical care. Policies can provide payment for the following.
- Medical Deduction Income Restrictions
- Taxpayers can only deduct medical expenses if they itemize their deductions. Beginning in 2013, medical expenses are only deductible if they exceed 10% (was 7.5% in prior years) of a taxpayer's income (AGI), and then only the amount that exceeds that income limit is actually deductible. For seniors (age 65 or older and their spouses) the limitation remains at 7.5% through 2016.
- Long-Term Care
- Amounts paid for long-term care services and certain premiums paid on long-term care insurance are deductible as medical expenses on Schedule A. Costs of care provided by a relative who is not a licensed professional or by a related corporation or partnership don't qualify. The maximum amount of long-term care insurance premiums treated as medical depends on the insured's age and is inflation-indexed annually.
- Nursing Services
- Wages and other amounts paid for nursing services can be included in medical expenses. Services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. These services can be provided in the home or another care facility.
- Smoking Cessation Programs
- The IRS has ruled that unreimbursed amounts paid by taxpayers for participation in smoking-cessation programs and for prescribed drugs designed to alleviate nicotine withdrawal are expenses for medical care that are deductible subject to the AGI limitation.
- Special Schools and Education
- You can include in medical expenses payments to a special school for a mentally impaired or physically disabled person, if the main reason for using the school is its resources for relieving the disability.
- Surrogate Mother Expenses
- Surrogate mother expenses are not specifically addressed in the Tax Code or Regulations. However, the Code does tell us that medical expenses are only deductible for the taxpayer, spouse and dependents. The definition of a dependent for medical purposes ignores the gross income and joint return tests.
- Weight Loss & Obesity Medical Deductions
- The expenses for certain weight-loss programs may be deducted as a medical expense. In order for uncompensated amounts paid by individuals for participation in a weight-loss program to be deductible, the program must be undertaken as treatment for a specific disease or diseases (including obesity) diagnosed by a physician. The costs are not deductible by taxpayers who participate in weight-loss programs to improve their general health or appearance.
- Medical Checklist
- The following is a checklist of medical expenses. The list is by no means all-inclusive and some of the deductions listed may have additional restrictions not included here. Please call this office with questions regarding these or other potential medical deductions.
- Medical Travel Expenses
- Auto Travel - Deduction is allowed at a specified cents per mile rate (see table) or for actual cost of gas and oil (not repairs, maintenance, depreciation, lease fees, etc.) when a vehicle is used for medical care purposes.