Deducting Your Medical Expenses

If you’re planning on deducting your medical and dental expenses from your income tax return this year, be aware there are a few changes in the IRS rules that could affect your bottom line. But we’ve got the list, and if you satisfy the requirements, your refund will still be headed your way, faster than you can say “AAAAAHHHHHHHHH.”

AGI Threshold Increases

Starting with the 2013 tax year, your allowable medical expenses have to exceed 10 percent of your adjusted gross income before you can claim a deduction. In past years, it was 7.5 percent.

If you or your spouse are age 65 or over, your AGI threshold for the medical deduction is still at the 7.5 percent level. But this offer won’t last long, so act today! This exception is due to expire after 2016.

To Deduct, Itemize

You can only claim your medical and dental expenses if you itemize deductions on your federal income tax return. You cannot claim those expenses if you take the standard deduction.

Show Them the Money

What qualifies for the deduction? You can include the cost of diagnosing, treating, easing or preventing disease. The cost of insurance premiums that you pay for policies that cover medical care also qualify, as does the cost of some long-term care insurance. Prescription drug and insulin costs are also qualified.

You can include most medical or dental costs that you paid for yourself, your spouse and your dependents. Be aware, though, there are exceptions, and sometimes special rules will apply. You can check out Publication 502 – Medical and Dental Expenses to see if any of those exceptions apply to you.

Remember, you can only include the medical or dental expenses you paid in 2013. If you paid by check, the day you mailed (or delivered) the check is usually considered the date of payment.

Travel Costs Count

If travel is a significant expense in your medical or dental picture, you may be able to claim that cost. That would include costs such as public transportation, ambulance service, tolls or parking fees. If you use your car, you can deduct either actual costs or the standard mileage rate for medical travel of 24 cents per mile.

No Double Dipping

One thing you can’t do with the deduction is claim expenses that you paid with funds from your Health Savings Account (HSA) or Flexible Spending Arrangement (FSA). Amounts paid with funds from those plans are usually tax-free.

Of course, we wish you only good health for the coming year. But if you do have medical or dental expenses that qualify for the deduction, hopefully you’ll get a clean bill of health from the IRS – along with a healthy refund!