What Counts Toward a Medical Deduction?

Gregory Hamel, Demand Media writes: Medical exams and procedures can result in thousands of dollars of out-of-pocket expenses, even if you have health insurance to help cover your costs. The federal government offers a medical and dental deduction to help ease the strain that health-related expenses can put on taxpayers. The medical and dental expenses deduction is an itemized deduction, which means you have to forgo your standard deduction if you want to claim medical expenses.

MEDICAL DEDUCTION BASICS

The medical expense deduction doesn't benefit everyone, because the Internal Revenue Service puts an annual income limit on your deduction. For the 2012 tax year, you can only deduct qualifying medical expenses in the amount that they exceed 7.5 percent of your adjusted gross income. For example, if your AGI is $60,000 and you have $5,000 in qualifying medical expenses for the year, you can only take a deduction of $500 because you have to subtract $4,500--7.5 percent of your AGI--from your deduction. The AGI limit is 10 percent starting in 2013 unless you or your spouse is over age 65.

DEDUCTIBLE MEDICAL EXPENSES

In general, any expense you that is medically necessary to keep you healthy is tax deductible. Fees paid for the services of health care practitioners like doctors, surgeons, chiropractors, psychiatrists, psychologists and acupuncturists are deductible. Amounts you pay for medical equipment necessary for your health, like false teeth and other dental appliances, hearing aids, glasses, contact lenses, artificial limbs, wigs and wheelchairs can also be included. The cost of training and maintaining a service animal is deductible.

TRAVEL COSTS

Costs related to travel to receive health care can be included in the medical expense deduction. According to the IRS, you can deduct the cost of bus, taxi, train, or plane fares or ambulance service paid to receive medical care. You can also deduct out-of-pocket car expenses, such as gas and oil, when using a vehicle for medical reasons. You can take a mileage deduction of 23 cents per mile on 2012 returns for medical use of a personal vehicle instead of deducting your actual out-of-pocket expenses.

NONDEDUCTIBLE EXPENSES

Although medically necessary costs are generally tax deductible, you can't deduct every type of health-related expense. Procedures aimed at improving appearance, such as cosmetic surgery, hair transplants and electrolysis, are not deductible unless they promote the proper function of the body or help fight disease or illness. The cost of nutritional supplements and vitamins is not deductible unless a doctor specifically recommends them to treat a medical condition. Medical expenses paid out of health savings accounts and flexible spending accounts are not deductible.