Medical Expenses

High health care costs have taxpayers considering the itemized deduction for medical expenses with renewed interest. As you may know, the deduction is limited to the amount of all your unreimbursed medical expenses that, when combined, exceeds 7.5% of your adjusted gross income (AGI). For many individuals, surpassing the 7.5% of AGI floor is getting easier. Check the list below for some of the expenses you may be able to deduct.

  1. Health insurance premiums.
  2. Co-pays, deductibles, and other amounts paid out-of-pocket for hospital and nursing care, visits to doctors and dentists, and prescription medications.
  3. Medically necessary home improvements.
  4. Long-term care insurance premiums and services (within IRS limits).
  5. Transportation to receive medical treatment, as well as food and lodging en route.

Tip: Taxpayers with medical expenses close to the 7.5% AGI hurdle may want to see if they can accelerate or decelerate incurring medical expenses to "bunch" them into a single tax year for higher deductions.