Tax Topic

Medical Expenses

Medical expenses are deductible, but most taxpayers do not realize a tax savings. This is because there is a "floor" that must be reached before any medical expenses are included in your itemized deductions, which would then lower your income and income tax.

Per the 2017 Tax Cuts and Jobs Act, the "floor" remains 7.5% of your Adjusted Gross Income (AGI). Roughly speaking AGI is your total income before itemized deductions and exemptions. For most people, AGI is the total of gross wages, interest & dividends, net self-employment income, capital gains, net rental income, net farm income, taxable Social Security benefits, retirement/pension distributions, and gambling or other miscellaneous income less retirement contributions, ½ self-employment tax, and some other items.

For 2019, the “floor” will be 10% of your Adjusted Gross Income (AGI).

For example, if your AGI is $80,000, your medical expense floor would be $6,000 (7.5% of $80,000). This means that you can only deduct medical expenses paid in excess of $6,000. When giving us your tax information, give us your total medical expenses -- we will calculate the "floor" and deductible amounts.

Medical expenses include doctor/dentist costs, lab fees, prescription drugs, mileage for medical purposes at 18 cents/mile for 2018, etc. They also include health insurance premiums if not paid pre-tax, including Medicare Part B premiums, as well as long-term care insurance premiums. Let us know if you have a specific expense you'd like to check on. Medical expenses generally do not include non-prescribed, over-the-counter medications.



< Back to Tax Topics page