Everyone has to pay taxes, but no one wants to pay more than they have to. Whether you’re counting on a big refund or simply want to keep the amount owed to Uncle Sam as low as possible, you need to take every deduction that’s legal. For many people aged 65 or older, this includes Medicare expenses.
Allowable Medical Expense Deductions for 2018
You can deduct medical and dental expenses that exceed 7.5 percent of your Adjusted Gross Income (AGI). To see how much you can deduct, calculate your Adjusted Gross Income. This is line 37 on Form 1040, line 21 on Form 1040A or line 4 on Form 1040EZ. Multiply the AGI by .075. If your medical and dental expenses were greater than this figure, you can deduct the difference.
For example, let’s say that your AGI for 2018 came to $45,000.
- Multiply $45,000 by 7.5 percent, or .075, to get $3,375.
- If your medical and dental expenses add up to less than $3,375, you cannot deduct anything.
- If your medical and dental expenses add up to more than $3,375, you can deduct the difference.
- For example, if you had $5,000 in medical and dental expenses with an AGI of $45,000, you could deduct $1,625.
Which Medical and Dental Expenses Qualify?
A wide range of medical and dental expenses can be included in your calculations. These include, but are not limited to, out-of-pocket costs for the following:
- Medicare premiums, including Medicare Part A premiums if you have to pay for coverage
- Your deductibles and coinsurance expenses for prescription drugs and medical care
- Eyeglasses and eye exams
- Chiropractor services for medical care
- Artificial teeth
- Hearing aids
- Transportation that is primarily for and necessary for medical care
Certain expenses cannot be deducted. These include but are not limited to the following rules:
- You cannot deduct Medicare taxes.
- You cannot deduct premiums paid using tax-free distributions from a retirement plan.
- You cannot deduct premiums for certain non-medical policies, such as life insurance.
If you haven’t been keeping track of your expenses, you may need to go through your financial documents, bills and receipts to collect the necessary information. Moving forward, it’s very helpful to keep track of all eligible expenses as they occur, and to retain receipts or payment stubs.
What About a Spouse’s Medical Expenses?
If you paid for your spouse’s medical expenses, you can deduct these, too—even if you’re filing separately. In order to qualify, you must have been married when your spouse received care or when you made the payment.
It may also be possible to deduct medical expenses that you paid for on behalf of a qualifying relative, such as a child, sibling, parent, whom you support and claim as a dependent.
Need More Help?
This information is based on IRS Publication 502. Please read the complete publication for more information, including a list of eligible medical expenses. If you have any questions or problems, you should seek help from a qualified tax professional. This article is intended to provide general information, please rely on an accounting or legal professional for advice pertaining to your specific information.