If you can clear a few hurdles, high health care costs might help lower your 2019 tax bill.
The deduction for medical expenses is one of the few tax breaks currently available to individuals, due to tax-law changes in effect from 2018 through 2025 that doubled the standard deduction and eliminated most other write-offs. As long as you itemize, a range of health care expenditures may count.
Additionally, Congress recently extended — for tax years 2019 and 2020 — a lower threshold to get it. That is, medical expenses above 7.5% of your adjusted gross income can count toward the deduction, instead of the 10% floor that was scheduled.
Blackwater Images | E+ | Getty Images
“With the higher standard deduction, not as many people are itemizing,” said CPA Sallie Mullins Thompson, principal of her eponymous firm in New York. “But if something takes them over that amount, it’s not unusual for it to be medical expenses.”
For married couples filing jointly, the 2019 standard deduction is $24,400. For singles, it’s $12,200, and for heads of households, $18,350. Taxpayers age 65 or older get an additional amount: $1,650 if you file single or head of household, and $1,300 per person if married filing jointly.
For itemizing to make financial sense, the total of your deductions would need to exceed the standard deduction. Other things that could push you over that amount include charitable contributions and mortgage interest, along with up to $10,000 for state and local taxes (a.k.a., SALT).
To illustrate how the 7.5% threshold works: If your adjusted gross income for 2019 was $50,000, only medical expenses that exceed $3,750 would qualify for the deduction.
Some states might have a lower threshold, said Cari Weston, a CPA and director of tax practice and ethics for the American Institute of CPAs.
“Look at your state’s rules, because even if you can’t get the deduction on your federal return, you might be able to on your state return,” Weston said.
As for what counts toward the federal tax break, qualifying expenses are far-ranging.
I’ve seen mistakes where someone claims an amount for a procedure they had but they hadn’t paid for it yet.
Director of tax practice and ethics for the American Institute of CPAs
Co-pays, co-insurance, dental work and eye glasses for you, your spouse or dependents are all fair game. So are hearing aids, crutches, wheelchairs and the like. You can check the IRS list of qualifying expenses if you’re unsure whether something counts toward the deduction.
Also, travel costs associated with health care also can be used.
“Think about someone with a chronic condition who’s going back and forth to doctor’s appointments and back and forth to pick up prescriptions,” Weston said. “All those miles are deductible.”
The reimbursement rate for mileage for medical reasons is 20 cents per mile for 2019. That compares with 58 cents for business expenses and 14 cents for driving related to charitable services.
Even modifications to your house — i.e., a wheelchair ramp, perhaps a swimming pool — can count if they were installed for medically necessary reasons.
Also, if you pay for health insurance with after-tax dollars, your premiums might be able to go toward the deduction. Long-term care premiums also are deductible up to amounts that depend on your age.
It’s important to remember that it’s the year in which you pay for your health care services is when the amount applies toward the deduction — not when you incur the expense.
“I’ve seen mistakes where someone claims an amount for a procedure they had but they hadn’t paid for it yet,” Weston said.
Also be aware that any expenses paid for with funds from a flexible spending account or health savings account cannot count toward the deduction because those contributions are already tax-advantaged.
Some expenses that also don’t work: most cosmetic procedures, nonprescription medicines and, generally speaking, gym memberships.
And while you don’t send in your receipts and records with your tax return, you’d need to be able to produce them if the IRS were to ask for proof of those expenses.