Are Medical Bills Deductible?

Medical expenses exceeding a certain percentage of your income may be tax-deductible. Whether you qualify for such deductions depends on your employment status as well as the nature of the medical procedure performed. If your employer offers a health insurance plan, this too may play a role as to whether you can deduct medical bills from your taxable income.

Threshold

• Medical expenses are only deductible if they exceed 7.5 percent of your adjusted gross income for the tax year. You may include expenses for yourself, your spouse as well as your legal dependents. The amount by which all such expenses exceed 7.5 percent of your adjusted gross income is tax-deductible. Your adjusted gross income is the number on line 37 of the 1040 tax form. To arrive at this figure, you must add all income including wages, salary, interest, rent and so on, and subtract certain items, including, but not limited to, qualified IRA contributions, moving expenses and alimony.

Accepted Costs

• Medical care expenses as well as the costs incurred for dental care are deductible if they exceed the 7.5 percent threshold. Doctor and dentist fees as well as cost of diagnosis and treatment must be added up when calculating your total medical cost for the year. Medical insurance premiums, too, are a form of medical expense and thus tax-deductible. The treatment of mental ailments also is accepted as a potentially tax-deductible expense. The costs of weight-loss programs is tax-deductible if the weight loss was for the treatment of a disease such as diabetes or obesity. Payments for prescription drugs qualify too. If a medical condition requires medical equipment for home use, disposable supplies and diagnostic devices you must purchase out-of-pocket, these are tax-deductible.

  For a complete list of deductible medical expenses, refer to IRS Topic 502.

Non-deductible Items

• All costs associated with aesthetic operations must be excluded from tax-deductible medical expenses. Funeral and burial expenses, even for legal dependents, are not tax-deductible. Over-the-counter medicines, programs and classes aimed at the improvement of your health and well-being, the cost of nicotine gum and patches that are not prescribed by a doctor are, likewise, not deductible.

  When calculating your tax-deductible expenses, you must subtract all reimbursements, regardless of whether they were paid to you, your doctor or a medical facility.

Self-Employment

• Compared to the aforementioned guidelines, which are for salaried workers, slightly different rules apply to self-employed filers. If you are self-employed, you may only deduct medical expenses from your taxable income during years when you record a net profit. These deductible premiums include the amounts paid for yourself, your spouse and legal dependents. If you spent part of the year as a salaried employee, you cannot deduct medical insurance premiums paid for the months during which you were eligible to participate in an employer-sponsored, subsidized health plan.