10 Facts To Know Before Taking the Medical Expenses Deduction in 2014

Medical expenses fall among the list of IRS deductions. Before filing 2013 taxes, first learn if you qualify.

If you are generally healthy then you probably won’t be able to take a medical tax deduction. However, if you racked up countless medical and dental bills over the tax year, you might qualify for the medical expenses deduction.

Whether your deducting medical expenses or not, you can file your taxes on RapidTax. To help your filing process of claiming medical expenses on your 2013 tax return, here’s ten important facts;

1. You must Itemize: Don’t plan on deducting medical expenses if you’re taking the standard deduction. You can only claim a deduction for medical expenses if itemizing your deductions.
2. The AGI threshold has increased to 10%: In the past, if your list of medical expenses totaled a number exceeding 7.5% of your adjusted gross income (AGI), then you could deduct them. Starting on 2013 tax returns, that percentage has increased by 2.5%. Meaning, your total medical expenses must equal at least 10% of your AGI.
3. The 7.5% threshold remains if 65 or Over: If you or your spouse are 65 or older (in the tax year), disregard what you read above in #2. That’s right, the prior threshold of 7.5% remains if in 2013, you or your spouse were at least 65.
If filing jointly, and only one of you are old enough, the threshold still remains at 7.5% for both of you. However, it’s good to know this applies only until Dec. 31, 2016, meaning in 2017, the threshold will increase.
4. Expenses for yourself, spouse & dependents count: When adding the total amount of medical expenses, don’t forget to include the deductible medical expenses of your spouse and dependents.
5. Only expenses paid in the tax year: You can only include expenses paid during the tax year. For example, if you paid a May 2013 medical bill in October 2013, you can include it in your 2013 return. If you paid that May 2013 bill in January of 2014, you can’t include it on your 2013 return.
6. Costs may be limited: Medical or dental costs reimbursed by insurance or other sources don’t qualify.
7. The list of qualifying expenses is extensive: Costs associated with prescription drugs, insulin, glasses, contact lenses, etc. qualify for the deduction. Other deductible medical expenses include costs from diagnosing, treating, easing or preventing diseases. The IRS Publication 502 lists all qualifying medical and dental expenses.
8. Remember to include travel costs: You might be able to claim medical care travel costs including public transportation, tolls, parking fees and ambulance service. If using your car, you can deduct the costs of the standard mileage rate for medical travel equally 24 cents per mile in 2013.
9. Don’t include expenses paid from HSA or FSA: You can not take the deduction for expenses paid from Health Savings Accounts (HSA) or Flexible Spending Arrangements (FSA) funds. 
10. Include costs prescribed as medically needed: If your physician told you to use a certain item for a medical condition, it is considered a medical expense deduction. For example, if your doctor told you to add a humidifier at home, you may deduct the associated costs.

  1. When filing your taxes on RapidTax, you can claim the medical tax deduction. Our online tax form is designed to make itemizing your deductions painless. After all, our goal is to make tax filing easy and fast, ultimately leaving you with the largest refund possible!

2/27/2014 Photo via opensource.com on Flickr

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