Chapter 17

Medical and Dental Expense Deductions

Tax deductions for the high cost of unreimbursed medical care are limited. For 2012, medical expenses are deductible only if you itemize and only if you have expenses exceeding 7.5% of your adjusted gross income. Expenses up to 7.5% of AGI are not deductible. There is an exception if you are self employed and paid health insurance premiums. As a self-employed person, you do not have to itemize your premiums; you can claim 100% of the premiums as an above-the-line deduction directly from gross income (12.2).

Carefully review the list of deductible expenses in this chapter so that you do not overlook any deductible expenses. Include payments of doctors’ fees, health-care premiums, prescription medicines, travel costs for obtaining medical care, and eligible home improvements.

If you are married, both you and your spouse work, and one of you has substantial medical expenses, filing separate returns may result in a lower overall tax.

Qualifying long-term-care expenses may be treated as medical expenses subject to the 7.5% of AGI floor, including a specified deductible amount of premiums paid for a qualifying long-term-care contract (17.15).

Deductible contributions to health savings accounts (HSAs) and Archer MSAs may be available to individuals covered by high deductible health plans; see Chapters 12 and 41.

Workers displaced from jobs by import competition may claim a refundable tax credit for health insurance premiums. The credit is claimed on Form 8885 (25.18).

17.1 Medical Expenses Must Exceed AGI Threshold

17.2 Allowable Medical Care Costs

17.3 Nondeductible Medical Expenses

17.4 Reimbursements Reduce Deductible Expenses

17.5 Premiums of Medical Care Policies

17.6 Expenses of Your Spouse

17.7 Expenses of Your Dependents

17.8 Decedent’s Medical Expenses

17.9 Travel Costs May Be Medical Deductions

17.10 Schooling for the Mentally or Physically Disabled

17.11 Nursing Homes

17.12 Nurses’ Wages

17.13 Home Improvements as Medical Expenses

17.14 Costs Deductible as Business Expenses

17.15 Long-Term Care Premiums and Services

17.16 Life Insurance Used by Chronically ill or Terminally ill Persons

Also see

12.2 Claiming Deductions From Gross Income

25.17 Health Coverage Credit

34.10 Tax Effects of Moving to a Continuing Care Facility

41.10 Health Savings Account (HSA) Basics

41.13 Archer MSAs