The medical expenses you accrue over the course of a year have the potential to take a pretty sizeable chunk out of your wallet, especially if you find yourself in the unfortunate position of needing emergency medical services or ones that aren’t 100% covered by your insurance plan.

The good news is that the IRS provides many taxpayers with relief by allowing them to deduct certain medical expenses when filing their taxes. In order to capitalize on these available tax deductions, you must have a basic understanding of what medical expenses are deductible and how exactly you go about claiming these deductions.

Which Medical Expenses Are Deductible?

  • Preventative care, treatment and surgeries
  • Dental care
  • Vision care
  • Psychologist/psychiatrist visits
  • Prescription medications
  • Medical devices/products such as contacts, glasses, dentures, hearing aids, etc.
  • Travel expenses to/from medical treatments (including public transportation fees, parking fees, mileage on your car, gas, etc.)

Which Medical Expenses Are NOT Deductible?

  • Elective procedures, or ones that are not deemed to be medically necessary (e.g. cosmetic procedures)
  • Non-prescription medications or any other general health products you purchase (e.g. vitamins, toothpaste, over-the-counter medications, smoking cessation products, etc.)
  • Medical expenses for which you receive reimbursement, whether from insurance, an employer or any other entity

For example, if you required emergency care in a non-VA facility and the VA reimbursed you for those health care costs, you would not be able to deduct those medical costs from your taxes for that year.


For a more in-depth list of medical expenses the IRS will and won’t permit you to include toward your 2016 medical deductions, refer to the official Publication 502.


How Much Can You Deduct?

The IRS allows taxpayers to deduct medical expenses (from the first list above) so long as they exceed 10% of your annual adjusted gross income (AGI). What exactly is your AGI? This is basically your total annual taxable income minus any adjustments to your income (e.g. IRA contributions, student loan interest paid, deductions, etc.).


For example, let’s say you have an AGI of $40,000. You would multiply that amount by 0.10 (10%), which equals $4,000. This means that if you racked up $6,500 in medical expenses this year, you would be able to deduct $2,500 ($6,500 - $4,000).


Why It’s Important to Understand This Deduction Limit

Since you only have until December 31 to receive medical services that have the potential to be deducted on your 2016 tax return, it’s helpful to know whether it’d be in your best interest to schedule a few more treatments before year end or if you’d be better off waiting until 2017.


For example, if you’ve already surpassed this 10% deduction limit, you’d be wise to book any deductible medical treatments before the year is over, this way you can just tack on these additional expenses to the amount you’ll be able to deduct when filing.

But if you’d still need to spend hundreds or thousands of dollars before reaching this 10% threshold, you may be better off waiting until 2017 to schedule these appointments, that way they start working toward the 10% limit in the beginning of the year, making you more likely to meet the limit next year.

Need Tax Help?

At G.I. Tax, we understand how tricky it can be to accurately claim your medical expenses and get the deductions you rightfully deserve. Rest assured we’re here to help you throughout each step of the filing process and that our ultimate goal is to get you the highest return possible.

To learn more about which deductions you qualify for or to find out if there are any other ways you can meet this 10% deduction limit, contact our friendly, knowledgeable tax preparers and financial advisors today.