Medical tax deductions can help lower your tax bill. What are medical tax deductions? How do they work? Here are the answers.
Medical expenses can be a burden, and that is why IRS allows you to deduct a certain amount of the medical expenses when filing your tax returns. However, you need to understand that medical tax deductions don’t work like other deductions. Not all medical costs are tax deductible. To help you understand more about medical tax deductions, here are several things you need to know.
What are medical tax deductions?
These are deductions you can claim when filing your tax returns after paying for medical expenses. The medical expenses must be equal or more than 10% of your adjusted gross income. Before 2019, the percentage was 7.5%. The aim of tax deduction for medical expenses is to help ease your financial burden brought by the illness or condition.
What medical expenses are tax deductible?
Not all medical expenses or costs qualify for tax deduction. Most of common qualifying expenses are for main treatments, main surgery operations and even preventive care. In addition to that, cost for dental care, vision care, prescriptions and visits to psychologists and psychiatrists are tax deductible. On the other hand, costs for non-prescription drugs, except insulin, non-life-saving cosmetic procedures, expenses reimbursed though an insurance policy, and health & hygiene products are not deductible.
How medical tax deductions work?
Many people don’t know how tax deduction for medical expenses work, and that is why we are here to enlighten them. Medical expenses can be a challenge to taxpayers, and that is why the IRS has provided guidelines on how your medical expenses can be deducted on your tax. First, your total qualified medical expenses must be equal or more than 10% of your adjusted gross income. To get the deductible amount, you just need to multiply your adjusted gross income by 0.10, and the amount you get, you deduct it from your qualifying medical expenses for that tax year. Then you can deduct the amount you get (medical tax deduction) from your tax return.
But you don’t have to do all those calculations as you can use TurboTax or H&R Block to know if you qualify for medical tax deduction, and even calculate how much medical tax deduction you can get. You just need to answer a fewer questions and the online tax program will do the rest for you. Using an online program will make the process simpler and help avoid errors that can occur when filing your taxes.
Ensure you pay your medical expenses
If you want to claim medical tax deduction, you must make sure you pay all your medical expenses. The IRS owes you a deduction only if you have paid your current medical bill. Also, it is essential to note that your future medical expenses don’t qualify for tax deductions.
Medical expenses can be a huge financial burden. However, all is not lost as you can qualify for medical expenses tax deduction which can ease your tax burden. You just need to use the right online tax filing program like TurboTax or H&R Block. Using one of these online tax programs is simple, fast and cost-effective compared to hiring a tax expert.