Tax-Deductible Medical Costs in 2021

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Whether you are suffering from an illness or have a family member who requires regular medical attention, there will be expenses that your healthcare insurance provider can’t cover. To cope with this, you might have to start looking for possible medical expenses that are tax-deductible for the following year.

What are Tax-Deductible Medical Expenses?

Medical expenses are defined by tax law as costs incurred for diagnosis, treatment, cure, mitigation, or prevention of sickness to treat any part or function of your body. This generally covers the costs for premiums in your health insurance, physician, hospital admission, prescription medicines, medical tests, and hospital facilities.

However, the Internal Revenue Service (IRS) lists a wide range of medical costs that may not fall under the mentioned categories.

In 2021, there are specific changes regarding the threshold portion of the tax-deductible expenses. For that reason, you must see to it that you’re keeping the right documents and ensure what records will count and what won’t.

The IRS lists tax-deductible medical costs, and these may include but are not limited to the following:

1. Professional fees. These are payments to doctors, surgeons, chiropractors, psychiatrists, dentists, psychologists, and unorthodox medical physicians.

Professional fees cover the time rendered by the physician, stress, and pressure due to the patient’s potential risk and the technical difficulty of the services given.

2. Hospital and other medical facility admissions. These are payments regarding the inpatients’ hospital services or nursing care facility only if you are required to stay in a nursing care facility for reasonable instances. These include the expenditures for meals and lodging incurred in the hospital or nursing home.

If, for any reason, the medical care doesn’t specifically recommend a nursing care facility to stay in, deductibles are only limited to medical care like prescriptions and professional fees.

3. Medicare travel expenses. These payments are transportation expenses essential to medical care that are eligible for medical expenses, like the costs of the actual fare for an ambulance, bus, taxi, train, or transportation using a personal car.

Out-of-pocket expenses using a personal car include costs for fuel gas and oil or standard mileage rate proceeds for medical care. Plus, costs of parking tickets and toll fees.

4. Prescription medicines and diabetes-related expenses. These are payments for insulin, blood-testing kits, and drugs used by individuals with prescription requirements.

5. Acupuncture treatments and medical rehabs.  Payments for alternative therapy such as acupuncture medication or treatment for drug and alcohol addiction in rehabilitation centers require inpatient hospitalization, plus programs for smoking cessation and drug withdrawal that require a doctor’s prescription.

6. Weight-loss program by physician’s order. These are payments for participation in a weight-loss program to treat a specific clinically diagnosed disease such as obesity. However, unusual fees for dietary products and expenses from fitness club dues are not included.

7. Physical impairment and disabilities expenses. These include payments for artificial teeth, contact lenses, prescription or reading glasses, hearing aids, wheelchairs, crutches, and service animals such as a dog guide to aid individuals living with visual impairment, hearing loss, or other physical disabilities.

8 .Admission and transportation for conferences intended for chronic medical conditions. These are payments made for transportation and admission in a medical conference primarily related to chronic medical conditions, either you, your spouse, or any of your dependents only if the expenses are essential and principal to needed medical care. Despite that, you may not be allowed to deduct the food and lodging expenses while attending the conference.

9. Premiums for medical insurance. These payments are made to your insurance premiums and policies  that will cover any medical care or a qualified long-year insurance care policy, including qualified long-term medical care services. However, if you are an employee, you are not allowed to deduct the portion of the premiums paid by your employer.

If your insurance premiums are employer-paid under the conversion premium plan, cafeteria plan, or other medical benefits and dental expenses provided by the plan are not allowable deductions. However, if the premiums are included in your Form W-2, known as the Wage and Tax Statement, it can be allowed.

How to Claim the Deductions

When claiming the medical expenses as deductions on your taxes, you must use the method of itemized deductions. This will require detailed record-keeping of the medical costs incurred throughout the year. A tedious work on your part is essential in order to accomplish this.

Nevertheless, if you’re not well-versed enough to fill up your tax form, it’s crucial to seek professional help. These professionals are capable enough to reduce the burden in your tax payment legally. Always ensure to talk with your tax accountant ahead of the preparation that you have current medical expenditures you’d like to deduct for them to give accurate advice.

The Bottom Line

It’s always essential to keep pertinent records of your medical expenses not just for the sake of claiming the allowable deductions in paying your taxes but also to keep track of your costs in order to verify them correctly. Also, a complete record of these expenditures will allow you to compare the expenses and find ways to reimburse such costs using legal procedures.