The information in this article is up to date through tax year 2023 (taxes filed in 2024).
It’s one of the most common questions tax preparers are asked: “Are my medical expenses tax deductible?” Before you can help your clients answer that question, you’ll need to know what types of medical expenses they have, what their adjusted gross income (AGI) is, and whether they will itemize deductions or take the standard deduction.
Here’s what you need to know to determine whether your clients can deduct their medical expenses.
What kind of medical expenses are tax deductible?
The IRS allows a wide range of medical expenses to be deducted, including alternative treatments such as acupuncture. These are the main categories of deductible medical expenses:
- Health insurance premiums (excluding any portion that is paid for by an employer)
- Payments to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners
- Prescription drugs and insulin
- Most dental expenses
- Expenses such as eyeglasses, hearing aids, crutches, wheelchairs, etc.
- Nursing home care
- Home improvements that increase accessibility for a person with a disability (such as a walk-in bathtub)
- Transportation costs (such as the cost of gas) incurred while traveling to receive medical care
- Lodging costs up to $50 per night when traveling to receive medical care
Expenses that are not eligible to be deducted include:
- Funeral or burial expenses
- Nonprescription medicines
- Toothpaste
- Toiletries
- Cosmetics
- A trip or program for the general improvement of your health
- Most cosmetic surgery
- Nicotine gum or patches that don’t require a prescription
Not sure if your client’s medical expenses are tax deductible? The IRS’s Can I Deduct My Medical and Dental Expenses? tool can help you quickly determine whether their expenses qualify.
For more detailed information on qualifying medical expenses, refer to IRS Publication 502.
How to calculate deductions for medical expenses
Once you’ve determined that your client’s medical expenses qualify as deductions, you can then calculate the total deductible amount. First, you’ll need to calculate your client’s adjusted gross income (AGI). Only medical expenses exceeding 7.5% of their AGI are deductible.
For example, if your client’s AGI was $75,000, 7.5% of their AGI is $5,625. They may only deduct medical expenses that exceed this amount. So, if they had $10,000 in qualifying medical expenses, $4,375 would be deductible.
Compare to the standard deduction
Keep in mind that your clients can only deduct medical expenses if they are itemizing deductions. If their deductible medical expenses combined with their other itemized deductions are less than the standard deduction, then opting for the standard deduction makes the most sense.
Note: Taking the standard deduction does not disqualify a taxpayer from receiving the premium tax credit if they qualify for it. The premium tax credit is refundable.
A note on health insurance for the self-employed
A self-employed person can deduct the cost of their health insurance premiums as a business expense rather than an itemized deduction. Because this deduction adjusts their income, it will apply regardless of whether they itemize their deductions or take the standard deduction. They must meet certain criteria to qualify for the self-employed health insurance deduction and cannot be eligible for health insurance subsidized through their employer or a spouse’s employer.
State tax deductions
States have different laws for deducting medical expenses, and clients not eligible to deduct them from their federal taxes may be able to do so on their state taxes. Be sure to familiarize yourself with the rules in your state.
