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| Deducting Medical Expenses to Reduce Tax Liability |
| Eligibility |
Taxpayers may deduct eligible medical expenses that exceed 7.5% of their adjusted gross income (AGI) for the year. To claim this deduction, you must itemize deductions on Schedule A (Form 1040 or 1040-SR).
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| Qualified Medical Expenses |
Expenses must be primarily to alleviate or prevent a physical or mental disability or illness. They include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners, as well as the costs of equipment, supplies, and diagnostic devices. Premiums paid for health insurance and transportation expenses related to medical care can also qualify.
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| Non-Qualified Expenses |
Non-deductible expenses include those that are merely beneficial to general health, such as vitamins or a vacation. Cosmetic procedures, non-prescription drugs (except insulin), and most cosmetic surgeries are also not deductible.
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| Timing of Expenses |
You can only deduct the medical expenses paid during the tax year, regardless of when the services were provided. If you pay medical expenses by check, the day you mail or deliver the check is generally considered the date of payment.
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| Reimbursements |
If you are reimbursed for any medical expenses by insurance or other sources, you cannot deduct those expenses. Only out-of-pocket expenses not covered by insurance or reimbursed by any other health plan are deductible.
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| How to Claim |
To claim the medical expenses deduction, you must itemize deductions on Schedule A (Form 1040 or 1040-SR). You cannot claim the standard deduction and itemize deductions at the same time.
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| Record Keeping |
Keep all receipts and records for medical expenses throughout the year, including statements from physicians, hospital records, and pharmacy records. You should also maintain records of transportation expenses and any other relevant medical expenses.
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| Threshold and Limitations |
Remember that only the amount of your total medical expenses that exceed 7.5% of your AGI is deductible. If your AGI is $50,000, for example, you can only deduct medical expenses that exceed $3,750.
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| Special Considerations |
If you are self-employed, you may be able to deduct 100% of your health insurance premiums, without itemizing, as an adjustment to income rather than as a medical expense.
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| State Taxes |
Some states have different rules for medical expense deductions. Check with your state's tax agency or a tax professional to understand your state's specific rules.
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| Professional Advice |
Tax laws can be complex and subject to change. It is advisable to consult with a tax professional or Certified Public Accountant (CPA) to ensure you are maximizing your tax benefits legally and appropriately.
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