Health Care Tax Benefits

With all the talk this year about medical costs and government benefits, it is easy to lose sight of the basic health care tax benefits already provided by Congress.

In 2012 taxpayers who itemize deductions on their tax return can deduct medical costs exceeding 7.5% of their (AGI) adjusted gross income, (increasing to 10% for taxpayers under age 65 in 2013).

Here's a tip: What counts is when you paid the bill, not when the treatment or prescription was received.

Types of costs that qualify for the medical deduction

Eligible expenses include those required to treat, prevent, or mitigate a disease or other medical condition. Such costs include prescription drugs, hospital bills, and premiums paid on health and dental insurance. And these costs can be incurred on behalf of yourself, a spouse, or a dependent. Just be sure to keep all applicable receipts to substantiate your expenses.

A deduction often overlooked is travel expenses incurred to receive medical care.

  • Travel by car: You can either deduct actual out-of-pocket expenses or the medical mileage rate of 23¢ per mile.
  • Lodging expenses for medical care are limited to $50 per night. You can include lodging for a person traveling with the person receiving the medical care, (a parent traveling with a sick child, up to $100 per night). Lodging is only deductible if the medical treatment is received from a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital and the lodging is primarily for or essential to the medical care received. Meals are NOT deductible.

Non-deductible Costs

Non-deductible costs (merely beneficial to general health) include:

  • Babysitting expenses to enable parent to visit a doctor
  • Hair transplant
  • Health club dues
  • Hygiene supplies
  • Illegal operations and treatments
  • Imported prescription drugs
  • Insurance (accidental loss of life, limb, loss of earnings during disability)
  • Marriage counseling
  • Maternity clothes
  • Medicines and drugs from other countries
  • Nonprescription drugs and medicines
  • Nutritional supplements, including vitamins
  • Trips, for general improvement of health
  • Weight loss program to improve appearance

To further explore your deduction options, contact our office.