Medical and Dental Expenses
Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.
Medical care expenses must be primarily to alleviate or prevent a physical or mental disability or illness.
Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract.
The new tax law temporarily reduces the percentage of your adjusted gross income (AGI) that you must exceed before you can deduct medical and dental expenses as an itemized deduction.
The new law reduced the percentage from 10 percent to 7.5 percent of your AGI for tax years 2017 (retroactive) and 2018. Therefore, more people may qualify to take this deduction than in the past.
Your AGI is your gross income less certain adjustments to your income and can be found on your tax return.
Before the new tax law, you could deduct as an itemized deduction qualified medical and dental expenses that exceeded 10 percent of your AGI.
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The new law retroactively applies to tax year 2017 as well as tax year 2018.
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For these tax years, you can deduct as an itemized deduction qualified medical and dental expenses that are more than 7.5 percent of your AGI. |
How will this affect me?
Michael incurs $9,000 in qualifying medical and dental expenses during tax year 2018. He files single filing status on his tax return and his AGI is $100,000. Michael plans to itemize his deductions because they exceed the new increased applicable standard deduction amount.
Michael can claim a $1,500 ($9,000 minus $7,500 which is 7.5 percent of AGI) itemized deduction for medical and dental expenses in tax year 2018. He may also consider amending his tax year 2017 tax return if he incurred substantial medical and dental costs in 2017 and the new 7.5 percent floor would allow him to increase his itemized deductions.
Same as above, but Michael only expects to have $10,000 total itemized deductions, including the $1,500 for medical and dental expenses. Michael would choose to take the standard deduction of $12,000 instead of itemizing his deductions. Therefore, he wouldn’t take a deduction for medical and dental expenses.