17.1 Medical Expenses Must Exceed AGI Threshold
The tax law provides only a limited opportunity to deduct unreimbursed medical costs for you, your spouse, and your dependents (17.7). Although a wide range of expenses are potentially deductible (Table 17-1) if you itemize expenses on Schedule A of Form 1040, your deduction may be completely disallowed or severely limited because of the AGI floor. For 2012, only expenses in excess of 7.5% of your adjusted gross income may be claimed (12.1). Adjusted gross income is shown on Line 37 and Line 38 of Form 1040. Married persons filing joint returns apply the 7.5% floor to their combined adjusted gross income.
Table 17-1 Deductible Medical Expenses
| Professional Services Chiropodist Chiropractor Christian Science practitioner Dermatologist Dentist Gynecologist Neurologist Obstetrician Ophthalmologist Optician Optometrist Orthopedist Osteopath Pediatrician Physician Physiotherapist Plastic surgeon; but see 17.3. Podiatrist Practical or other nonprofessional nurse for medical services only, not for care of a healthy person or a child who is not ill. Costs for medical care of elderly person unable to get about or person subject to spells are deductible (17.12). Psychiatrist Psychoanalyst Psychologist Registered nurse Surgeon Unlicensed practitioner services are deductible if the type and quality of the services are not illegal. Dental Services Artificial teeth Cleaning teeth Dental X-rays Extracting teeth Filling teeth Gum treatment Oral surgery Straightening teeth Equipment and Supplies Abdominal supports Air conditioner where necessary for relief from an allergy or for relieving difficulty in breathing (17.13). Ambulance hire Arches Artificial eyes, limbs Autoette (auto device for handicapped person) Back supports |
Braces Breast pumps and lactation supplies Contact lenses and solutions Cost of installing stair-seat elevator for person with heart condition (17.13). Crutches Elastic hosiery Eyeglasses Fluoridation unit in home Hearing aids Heating devices Invalid chair Iron lung Orthopedic shoes—excess cost over cost of regular shoes Oxygen or oxygen equipment to relieve breathing problems caused by a medical condition Reclining chair if prescribed by doctor Repair of special telephone equipment for the deaf Sacroiliac belt Special mattress and plywood bed boards for relief of arthritis or spine Splints Truss Wheelchair Wig advised by doctor as essential to mental health of person who lost all hair from disease Medical Treatments Abortion Acupuncture Blood transfusion Childbirth delivery Diathermy Electric shock treatments Hearing services Hydrotherapy (water treatments) Injections Insulin treatments Laser eye surgery or radial keratotomy to improve vision Navajo healing ceremonies (“sings”) Nursing Organ transplant Prenatal and postnatal treatments Psychotherapy Sterilization Radial keratotomy |
| Radium therapy Ultraviolet ray treatments Vasectomy Whirlpool baths X-ray treatments Medicines and Drugs Cost of prescriptions only; over-the-counter medicine is not deductible. Laboratory Examinations and Tests Blood tests Cardiographs Metabolism tests Spinal fluid tests Sputum tests Stool examinations Urine analyses X-ray examinations Hospital Services Anesthetist Hospital bills Oxygen mask, tent Use of operating room Vaccines X-ray technician Premiums for Medical Care Policies (17.5) Blue Cross and Blue Shield Contact lens replacement insurance Medicare A (if not covered by Social Security), Medicare B supplemental insurance, and Medicare D prescription drug coverage Health insurance covering hospital, surgical, and other medical expenses Membership in medical service cooperative Miscellaneous Alcoholic inpatient care costs Birth control pills or other birth control items prescribed by your doctor Braille books—excess cost of Braille works over cost of regular editions Childbirth classes for expectant mother Clarinet lessons advised by dentist for treatment of tooth defects Convalescent home—for medical treatment only |
Drug treatment center—inpatient care costs Fees paid to health institute where the exercises, rubdowns, etc., taken there are prescribed by a physician as treatments necessary to alleviate a physical or mental defect or illness Kidney donor’s or possible kidney donor’s expenses Lead-based paint removal to prevent a child who has had lead poisoning from eating the paint. Repainting the scraped area is not deductible. Legal fees for guardianship of mentally ill spouse where commitment was necessary for medical treatment Lifetime care—advance payments made either monthly or as a lump sum under an agreement with a retirement home (34.10). Long-term care costs for chronically ill (17.15). Nurse’s board and wages, including Social Security taxes paid on wages Pregnancy test kit Remedial reading for child suffering from dyslexia School—payments to a special school for a mentally or physically impaired person if the main reason for using the school is its resources for relieving the disability (17.10). “Seeing-eye” dog and its maintenance Smoking cessation programs Special school costs for physically and mentally handicapped children (17.10). Telephone-teletype costs and television adapter for closed caption service for deaf person Travel to obtain medical care (17.9). Wages of guide for a blind person Weight-loss program to treat obesity or other specific disease (17.2). |
Caution
Unless current law is changed, it will be even more difficult to deduct medical expenses starting in 2013 for those under age 65. For 2013, the AGI threshold is scheduled to increase to 10% from 7.5%. However, the floor will remain at 7.5% of AGI through 2016 for taxpayers age 65 or older. Proposals have been made in Congress to block the AGI threshold increase; see the e-Supplement for an update.
Does your expense count as paid in 2012?
On your 2012 return, you may deduct expenses paid in 2012 in cash or by a check you mail in 2012 (unless the check is postdated to 2013) for yourself, your spouse (17.6), or your dependents (17.7). The 2012 deduction includes payments made in 2012 for medical services provided before 2012. If you borrow to pay medical or dental expenses, you claim the deduction in the year you use the loan proceeds to pay the bill, even if you do not repay the loan until a later year. If you paid medical or dental expenses by credit card in 2012, the deduction is allowed in 2012, although you do not pay the charge bill until 2013. If you pay expenses online, the payment date shown on your online bank statement governs.
Law Alert
| Unreimbursed expenses | $ 2,000 |
| Premiums | 1,250 |
| Drugs | 420 |
| Total | $ 3,670 |
| Less: 7.5% of adjusted gross income (7.5% of $40,000) | 3,000 |
| Medical expense deduction for 2012 | $670 |