Review of acceptable medical expenses for tax purposes

It may be hard to go a complete year without spending money for health purposes.  However, not everything we consider “healthful” counts as a medical expense!  Generally speaking, the IRS only considers expenses specifically related to the medical community to be acceptable, and the states follow suit.  That is, joining a gym, taking vitamins, and even putting Band-Aids® on boo-boos are not deductible for tax purposes.

What kinds of expenses count?
In Publication 502, page 2, the IRS defines medical expenses as “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease…and payments for legal medical services rendered by physicians, surgeons, dentists and other medical practitioners…to alleviate or prevent a physical or mental defect or illness.  They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.”  (Yes, that is a direct quote from the IRS publication.  Apparently, someone has a sense of humor.)

Staying on top of the Medical Expense Deduction

Along with charitable contributions, state tax expense, mortgage interest, and real estate tax, many folks have been able to include a little something for medical expenses on their Schedule A: Itemized Deductions, but this is changing.

Here’s how it used to work:  figure out your Adjusted Gross Income(AGI), take 7.5% of your AGI, and any medical expenses in excess of this amount get included with your itemized deductions.  Basically, this meant that the government figured you should be able to afford to spend up to 7.5% of your available income on medical expenses, and anything beyond that merited special consideration, namely, a tax deduction.