Healthcare costs are soaring, but the IRS does allow you to write off some of these medical expenses on your taxes. Designed to help taxpayers burdened with the expenses associated with emergency and routine care, medical deductions are still subject to eligibility requirements or rules. A wide range of unreimbursed treatments, costs and therapies may qualify for deduction. But, in true IRS fashion, the rules for claiming medical bills are very specific, and the list of qualifying tax deductible expenses is quite extensive.
Can I Claim Medical Bills from Previous Years?
While the rules for claiming medical expenses can be tricky, the IRS is very straightforward in regards to when you’re able to claim medical expenses. You may deduct medical-related costs pertaining to yourself only for the year in which the treatments or services were paid for, and not the year in which they were rendered. For example, if you scheduled and paid for knee surgery for yourself in 2016, but did not undergo the actual procedure until 2017, then you can deduct any associated medical expenses only for the 2016 tax year.
This rule is different when you’re paying for the costs of medical treatment for a spouse or dependents. Unlike when claiming your own medical deductions, deductions taken for unreimbursed medical expenses made for another person may be taken either when the service was provided, or when the bill was paid.
Who Can Claim Medical Deductions?
Only taxpayers who itemize deductions on their tax returns are eligible to claim medical expenses on their taxes, so you cannot write off these costs if you claim standard deductions. If your total itemized medical expenses – plus other qualifying deductions – are greater than the sum of your standard deduction and any exemptions, then you should itemize. It is best to run both scenarios to see which provides you with the greater deduction. Sometimes you may discover that your standard deduction is a better choice than itemizing. If you’ve decided to itemize your medical expenses, use Schedule A of IRS Form 1040.
Not only are you able to claim a prior year’s medical bills for yourself, but any bills you paid for your spouse or qualifying dependent are eligible as well – provided the services are acceptable medical deductions.
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Is There a Limit to Deducting Medical Bills?
For tax years 2017 and 2018, legislation recently passed that extended the medical expenses deduction threshold – scheduled to expire after the 2016 tax year – for an additional two years. Regardless of age, taxpayers can now claim eligible medical or dental expenses greater than 7.5 percent of their adjusted gross income, or AGI, through 2018. For example, if your total AGI is $35,000, you can write off only qualifying medical expenses that exceed $2,625, or 7.5 percent of your AGI. For the 2019 tax year, this threshold is slated to rise to 10 percent of AGI for medical deductions.
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