The Most Commonly Overlooked Medical Expense Deductions: A How-To Tax Guide
NEW YORK ( MainStreet) The Tax Code tells us you can deduct as an Itemized Deduction on Schedule A amounts you pay for yourself, your spouse or a dependent for the "diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body."
Beginning with 2013, thanks to the Affordable Care Act, if you are under age 65 medical expenses are deductible only to the extent that the total exceeds 10% of your Adjusted Gross Income (AGI). If your AGI is $70,000, the first $7,000 of medical expenses are not deductible. If the total of your allowable medical expenses for the year is $6,000 you get no deduction. If the expenses for the year total $8,000 you get a tax deduction of $1,000. The exclusion is 7.5% of AGI for taxpayers over age 65.
Medical deductions are not limited to costs involved for physical disorders, but also include expenses relating to psychological and emotional disorders.
Neither the medical practitioner prescribing the treatment nor the method of treatment prescribed has to be American Medical Association approved or sanctioned to claim a tax deduction, as long as the practitioner and treatment are valid within the patient's religious or cultural context. Deductions for treatment by Christian Science Practitioners and Native American medicine men have been allowed by the IRS and the courts.
An often overlooked medical deduction is the cost of travel to and from doctors, dentists, hospitals, clinics, therapists, etc. to receive medical care. You can also deduct round-trip travel to visit a sick spouse or dependent if the visits are recommended by a doctor as part of the patient's treatment. If you take a taxi, bus, train, airplane or ambulance, you can deduct the actual expense. If you drive for 2013 you can deduct 24 cents per mile plus any parking fees and tolls. For 2014 the standard mileage rate drops to 23.5 cents per mile. You should keep a medical travel log during the year to keep track of miles driven or public transportation costs if you make frequent trips to doctors, dentists or therapists for treatment.
Also deductible as medical travel is the cost of lodging while away from home primarily for and essential to medical care by a doctor at a licensed hospital or similar facility. You can claim up to a maximum of $50.00 per person per night. Meals while away from home overnight are not deductible. You can deduct the cost of the hotel room, but not the dinner bill. The lodging expenses of a person accompanying a patient, such as a parent or a spouse, are also deductible, up to 50.00 per night, if that person's presence is primarily for and essential to the patient's care.