Most taxpayers are aware that they are eligible for a tax exemption if they spend a part of their income in medical and dental treatments. They, however, are unsure about the exact rules of tax deductions and how they apply in their case. As a result, we receive several enquiries from taxpayers across the country, seeking clarification on different doubts. To help clear the smokescreen, here is a list of some of the most common questions we come across, along with the answers. Take a look.
1. Can I claim a tax deductions for medical and dental expenses?
Yes, you can claim a tax deductions for your medical and dental expenses; however, if you do so, you need to itemize the deductions on your federal tax return, instead of applying for a standard deduction.
2. I have heard there’s an income criterion. What is it?
According to the IRS’ guidelines, you can include all the qualified medical costs that you incurred during a tax year, if the amount you paid as medical costs exceeds 10 percent of your adjusted gross income. Remember, if you or your spouse’ age is 65 years or more, the medical costs must exceed only 7.5 percent of your adjusted gross income, and not the regular 10 percent. The, benefit, however, applies until 31st December, 2016.
3. What exact benefits am I entitled to receive?
You can claim a tax deductions for the medical and dental expenses that you incurred on a treatment that you, your spouse or your dependents underwent. You can include the following expenses in your claim:
- The amount spent in the diagnosis, treatment and prevention of a disease
- The amount paid for prescription drugs and insulin
- The insurance premiums of the medical care policies in place
- Certain long-term care insurance costs
In addition, it is important note that any reimbursements that you received through insurance or any other source do not qualify for any deduction. To learn more, you may visit the official website of IRS and check “Publication 502 – Medical and Dental Expenses”.
4. Can I deduct my travel costs?
Yes, you can deduct the travel expense that you incurred during medical care. The travel costs for which you can claim a deduction includes public transportation, amount paid for ambulance services, and tolls or parking fees. If you used your own car for travelling during the treatment, you can claim a deduction based on the actual cost incurred, or on the basis of the applicable standard mileage rate for medical travel. For example, last year, the rate was 23 cents per mile.
5. Can I claim a deduction if I paid for my medical expenses through my Health Savings Account or Flexible Spending Arrangements?
Amounts paid through Health Savings Account or Flexible Spending Arrangements are usually tax free, and therefore, if you paid your medical bills through any of these plans, you cannot claim a tax deductions.
6. Can the IRS help me calculate how much medical expenses I can deduct?
Yes, the IRS provides a tool (Interactive Tax Assistant) to taxpayers, to calculate the deductions on medical bills. The tool can answer a wide range of questions on various tax topics, one of which is the health care law.
These were some of the concerns that most taxpayers have, and we hope you found answer to some of yours, too. If, however, you still have any question or need help with filing your tax return, contact our tax expert at The Law Offices of Nick Nemeth, and we will be happy to help. To reach us, simply call 972-627-4580 or email us at info@myIRSteam.com.