Table of Contents
- What's New
- Reminders
- Introduction
- Useful Items - You may want to see:
- What Are Medical Expenses?
- What Expenses Can You Include This Year?
- How Much of the Expenses Can You Deduct?
- Whose Medical Expenses Can You Include?
- What Medical Expenses Are Includible?
- How Do You Treat Reimbursements?
- Damages for Personal Injuries
- How Do You Figure and Report the Deduction on Your Tax Return?
- Impairment-Related Work Expenses
- Health Insurance Costs for Self-Employed Persons
Standard mileage rate. The standard mileage rate allowed for operating expenses for a car when you use it for medical reasons is:
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19 cents per mile from January 1–June 30, and
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27 cents per mile from July 1–December 31, 2008.
See Transportation under What Medical Expenses Are Includible.
Diagnostic medical tests. The following medical procedures and devices have been determined to be medical expenses:
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An annual physical examination.
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A full-body electronic scan.
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A pregnancy test kit.
Health coverage tax credit. There is a credit for health insurance premiums paid by certain workers who are displaced by foreign trade or who are receiving a pension from the Pension Benefit Guaranty Corporation. For more information, see Health Coverage Tax Credit in chapter 37.
This chapter will help you determine the following.
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What medical expenses are.
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What expenses you can include this year.
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How much of the expenses you can deduct.
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Whose medical expenses you can include.
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What medical expenses are includible.
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How to treat reimbursements.
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How to report the deduction on your tax return.
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How to report impairment-related work expenses.
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How to report health insurance costs if you are self-employed.
Publications
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502 Medical and Dental Expenses
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969 Health Savings Accounts and Other Tax-Favored Health Plans
Form (and Instructions)
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Schedule A (Form 1040) Itemized Deductions
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. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. They also include dental expenses.
Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.
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.
You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged.
You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income (Form 1040, line 38).
In this chapter, the term “7.5% limit” is used to refer to 7.5% of your adjusted gross income. The phrase “subject to the 7.5% limit” is also used. This phrase means that you must subtract 7.5% (.075) of your adjusted gross income from your medical expenses to figure your medical expense deduction.
You can generally include medical expenses you pay for yourself as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. There are different rules for decedents and for individuals who are the subject of multiple support agreements. See Support claimed under a multiple support agreement , later.
You can include medical expenses you paid for your spouse. To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses.
Example 1.
Mary received medical treatment before she married Bill. Bill paid for the treatment after they married. Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns.
If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. Mary would include the amounts she paid during the year in her separate return. If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction.
Example 2.
This year, John paid medical expenses for his wife Louise, who died last year. John married Belle this year and they file a joint return. Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical deduction for this year.
You can include medical expenses you paid for your dependent. For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met.
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The person was a qualifying child (defined later) or a qualifying relative (defined later), and
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The person was a U.S. citizen or national, or a resident of the United States, Canada, or Mexico. If your qualifying child was adopted, see Exception for adopted child, next.
A qualifying child is a child who:
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Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew),
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At the end of 2008 was:
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Under age 19,
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Under age 24 and a full-time student, or
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Permanently and totally disabled,
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Lived with you for more than half of 2008, and
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Did not provide over half of his or her own support for 2008.
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The child is in the custody of one or both parents for more than half the year,
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The child receives over half of his or her support during the year from his or her parents, and
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The child's parents:
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Are divorced or legally separated under a decree of divorce or separate maintenance,
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Are separated under a written separation agreement, or
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Live apart at all times during the last 6 months of the year.
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A qualifying relative is a person:
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Who is your:
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Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild),
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Brother, sister, or a son or daughter of either of them,
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Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle),
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Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or
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Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law,
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Who was not a qualifying child (see Qualifying Child earlier) of any other person for 2008, and
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For whom you provided over half of the support in 2008. But see Child of divorced or separated parents , earlier, and Support claimed under a multiple support agreement, next.
Example.
You and your three brothers each provide one-fourth of your mother's total support. Under a multiple support agreement, you treat your mother as your dependent. You paid all of her medical expenses. Your brothers reimbursed you for three-fourths of these expenses. In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. Your brothers cannot include any part of the expenses. However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses.
Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. This includes expenses for the decedent's spouse and dependents as well as for the decedent.
The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. The expenses must be paid within the 1-year period beginning with the day after the date of death. If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return.
Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA or health savings account.Amended returns and claims for refund are discussed in chapter 1.
Use Table 21-1 below, as a guide to determine which medical and dental expenses you can include on Schedule A (Form 1040).
This table does not include all possible medical expenses. To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier.
You can include in medical expenses insurance premiums you pay for policies that cover medical care. Medical care policies can provide payment for treatment that includes:
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Hospitalization, surgical services, X-rays,
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Prescription drugs and insulin,
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Dental Care,
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Replacement of lost or damaged contact lenses, or
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Long-term care (subject to additional limitations). See Qualified Long-term Care Insurance Contracts in Publication 502.
If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement.
Note.
When figuring the amount of insurance premiums you can include in medical expenses on Schedule A, do not include any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments.
Example.
You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money.
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Payable in equal yearly installments, or more often, and
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Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years).
Table 21-1.Medical and Dental Expenses Checklist See Publication 502 for more information for these and other expenses.
You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to get medical care. See Nursing home, later.
You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. You can include the cost of such lodging while away from home if all of the following requirements are met.
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The lodging is primarily for and essential to medical care.
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The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital.
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The lodging is not lavish or extravagant under the circumstances.
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There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.
The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. You can include lodging for a person traveling with the person receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Meals are not included.
You can include in medical expenses the amount you pay for an annual physical examination and diagnostic test by a physician. You do not have to be ill at the time of the examination.
You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care.
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Bus, taxi, train, or plane fares, or ambulance service,
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Transportation expenses of a parent who must go with a child who needs medical care,
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Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and
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Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment.
Example.
Bill Jones drove 2,800 miles for medical reasons during the year. Bill drove 1,000 from January 1–June 30 and 1,800 miles from July 1–December 31. He spent $400 for gas, $30 for oil, and $100 for tolls and parking. He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction.
He figures the actual expenses first. He adds the $400 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $530.
He then figures the standard mileage amount. He multiplies the 1,000 miles by 19 cents a mile and 1,800 miles by 27 cents a mile for a total of $676. He then adds the $100 in tolls and parking for a total of $776.
Bill includes the $776 of car expenses with his other medical expenses for the year because the $776 is more than the $530 he figured using actual expenses.
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Going to and from work, even if your condition requires an unusual means of transportation.
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Travel for purely personal reasons to another city for an operation or other medical care.
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Travel that is merely for the general improvement of one's health.
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The costs of operating a specially equipped car for other than medical reasons.
Some disabled dependent care expenses may qualify as either:
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Medical expenses or
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Work-related expenses for purposes of taking a credit for dependent care. (See chapter 32.)
You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction.
You can include in medical expenses only those amounts paid during the taxable year for which you received no insurance or other reimbursement.
You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. This includes payments from Medicare.
Even if a policy provides reimbursement for only certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not provide reimbursement for.
Example.
You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. The insurance you receive for the hospital and doctors' bills is more than their charges. In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses.
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Permanent loss or loss of use of a member or function of the body (loss of limb, sight, hearing, etc.) or disfigurement to the extent the payment is based on the nature of the injury without regard to the amount of time lost from work, or
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Loss of earnings.
You do not have a medical deduction if you are reimbursed for all of your medical expenses for the year.
If you receive an amount in settlement of a personal injury suit, part of that award may be for medical expenses that you deducted in an earlier year. If it is, you must include that part in your income in the year you receive it to the extent it reduced your taxable income in the earlier year. See Reimbursement in a Later Year , discussed under How Do You Treat Reimbursements.
Once you have determined which medical care expenses you can include, you figure and report the deduction on your tax return.
You figure your medical expense deduction on lines 1–4 of Schedule A, Form 1040. You cannot claim medical expenses on Form 1040A, or Form 1040EZ. If you need more information on itemized deductions or you are not sure if you can itemize, see chapters 20 and 29.
Enter the amount you paid for medical and dental expenses on line 1, Schedule A (Form 1040). This should be your expenses that were not reimbursed by insurance or any other sources.
You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income shown on line 38, Form 1040. For an example, see the partial Schedule A, above.
If you are disabled, you can take a business deduction for expenses that are necessary for you to be able to work. If you take a business deduction for these impairment-related work expenses, they are not subject to the 7.5% limit that applies to medical expenses.
You are disabled if you have:
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A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or
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A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working.
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Necessary for you to do your work satisfactorily,
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For goods and services not required or used, other than incidentally, in your personal activities, and
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Not specifically covered under other income tax laws.
Example.
You are blind. You must use a reader to do your work. You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. The reader's services are only for your work. You can deduct your expenses for the reader as business expenses.
If you were self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, amounts paid for medical and qualified long-term care insurance on behalf of yourself, your spouse, and your dependents.
For those purposes, you were self-employed if you were a general partner (or a limited partner receiving guaranteed payments) or you received wages from an S corporation in which you were more than a 2% shareholder.
The insurance plan must be established under your trade or business and the deduction cannot be more than your earned income from that trade or business.
You cannot deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer or your spouse's employer. You cannot deduct payments for a qualified long-term care insurance contract for any month in which you were eligible to participate in a long-term care insurance plan subsidized by your employer or your spouse's employer.
If you qualify to take the deduction, use the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 instructions to figure the amount you can deduct. But if any of the following applies, do not use the worksheet.
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You had more than one source of income subject to self-employment tax.
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You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion.
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You are using amounts paid for qualified long-term care insurance to figure the deduction.
If you cannot use the worksheet in the Form 1040 instructions, use the worksheet in Publication 535, Business Expenses, to figure your deduction.
Note.
When figuring the amount you can deduct for insurance premiums, do not include any advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Also, if you are claiming the health coverage tax credit, subtract the amount shown on Form 8885, line 4, from the total insurance premiums you paid.
Also, do not include amounts paid for health insurance coverage with retirement plan distributions that were tax-free because you are a retired public safety officer.
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