How it works
Remember last week when we talked about itemized deductions? I’m certain you don’t. The important thing to remember here is that in order to take itemized deductions, the total of all of your deductions have to be more than the standard deduction. The standard deduction for 2023 is $13,850 for single people and $27,700 for married people. If the total of all of your itemized deductions is more than the standard deduction, then you take itemized deductions and list them all out on schedule A.
One of the itemized deductions on schedule A is medical expenses. The most important thing to note about medical expenses is that there is an AGI floor in order to take the deduction. AGI stands for adjusted gross income, and it’s calculated on your tax return. In order to deduct medical expenses, the total of all of your medical expenses have to be GREATER THAN 7.5% of your AGI. In other words, if you make $100,000 in 2023, you must have AT LEAST $7,500 medical expenses before they start to matter. Every dollar after $7,500 will be added to your itemized deductions. So if I’m single and have $10,000 in medical expenses, I’d deduct $2,500 on schedule A. If my $2,500 in medical expenses plus my other itemized deductions is more than the standard deduction, then the medical expenses mattered. If not, I’ve wasted time.
This is why most people don’t bother collecting medical bills and receipts each year on their taxes. The higher your household income gets, the more difficult it becomes to have enough in medical expenses to justify putting in the work.
What expenses are deductible?
A bunch of them! Probably more than you think. I won’t bother going through a list of ALL deductible medical expenses. Generally speaking, nearly all payments to healthcare professionals are going to be deductible medical expenses. These would include doctors, dentists, orthodontists, chiropractors, optometrists, etc. Instead of going through all of the ones that are more obviously deductible, here is a list of items that are deductible that may surprise you. Some of them may also make you giggle if you’re 11 years old like me:
Acupuncture
Artificial teeth
Birth control pills
Braille books and magazines
Breast pumps and supplies – just not the cost of excess bottles for storage
Christian science practitioners
Drug treatment/addiction services
Fertility treatment (in vitro, egg/sperm storage, and surgeries)
Guide dog/service animal for blind/disabled individuals, including the cost of training, grooming, food, and other expenses
Insurance – only post-tax medical insurance premiums are deductible. If you have an employer-sponsored cafeteria plan, these are generally not deductible
PPE – masks, hand sanitizer, wipes, etc.
Lead-based paint removal
Nursing homes – this one is complicated, so reach out if you have questions
Pregnancy tests
Smoking cessation programs
Transportation expenses to/from medical treatments. You can take mileage and any lodging/meals required for the treatments
Vasectomy
Wigs (purchased after advice from a physician for the mental health of a patient who has lost their hair from a disease)
What expenses are NOT deductible?
Again, there are a bunch of these, but here are the ones that I’m always asked about by a handful of clients every year:
Weed! It’s still illegal under federal law.
Boob jobs, face lifts, liposuction, etc.
Diapers
Funeral expenses (they’re already dead)
Gym memberships/health club fees
Go-fund-me donations to a friend in need of medical care
Maternity clothes
Medicine/drugs from other countries
Nutritional supplements
Teeth whitening
Veterinarian fees (your dog does not pay taxes, and therefore cannot take deductions)
Again, none of this matters for roughly 95% of my clients. However, if you have a big year for medical expenses, it may be worth totaling them up and giving them to us with your tax documents. At the very least, I can tell you how much you need for it to matter when I’m finished entering your income documents. If you have any questions about your medical expenses, please feel free to reach out. Just please remember that I can’t un-know your medical history once you tell me.
