February 19, 2018 - Douglas Myser

Tax Deductions. IRS publication Topic 502 has a summary list of new medical expenses that are allowed under the new tax law recently passed. These tax deductions are subject to certain limitations, so be careful to check with your tax preparer or if you are self filing, check them out prior to filing your tax return. Most medical expenses are subject to the 7.%% limitation. Tax Deductions.

If you itemize on form 1040, you can deduct certain medical expenses, and certain dental expenses that exceed 7.5% 5 of your adjusted gross income. The amount is determined on Schedule A, or form 1040. Medical expenses include diagnosis, cure, mitigation treatment, or prevention of disease, or for treatments affecting any function of the body.

The following medical expenses are allowed expenses, payments for fees to doctors surgeons, dentists, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners. Payments for insulin and payments for drugs that you need a prescription for. Tax deductions may also be taken for transportation for essential medical care that would qualify as a medical expense, such as a taxi ride, a bus, or train, ambulance, or expenses for your personal car, including out of pocket gas and oil, parking, plus any tolls. Tax deductions for all of these expenses are generally accepted.

If you're self employed and have a profit for the year, you can apply the self employment health deduction to offset your income. This is an adjustment to income not a IRS itemized deduction. You will only be allowed to take a deduction for medical expenses you paid during the year. You then must reduce your total expenses for the year by any reimbursement you receive for those expenses. Your tax deductions must be carefully determined so you go over the 7.5% of income, otherwise you cannot use these expenses as tax deductions. Be careful to accurately determine the total amount of allowed expenses, and then determine if it meets the 7.5% of income test. To determine the legitimacy  of tax deductions, see the "Can I Deduct My Medical and Dental Expenses?" publication or Publication 502 on the IRS website, IRS.GOV

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