Deduct Medical and Dental Expenses
The IRS medical and dental deductions have a few rules but still it’s a big savings for a lot of folks.
This is for you, your spouse and dependents (the kiddies, maybe grandma etc., but not the dog).
And… there is a Health Coverage tax credit, see IRS Publication 502.
You will have to itemize
You deduct qualifying medical and dental expenses if you itemize on IRS Form 1040, Schedule A.
Deduction is limited
You can deduct total medical care expenses that exceed 7.5 percent of your adjusted gross income for the year. You figure this on IRS Form 1040, Schedule A.
Expenses must have been paid in 2011
You can include the medical and dental expenses you paid during the year, regardless of when the services were provided. You’ll need to have good receipts or records to substantiate your expenses.
You can’t deduct reimbursed expenses
Your total medical expenses for the year must be reduced by any reimbursement. Normally, it makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital.
Whose expenses qualify
You may include qualified medical expenses you pay for yourself, your spouse and your dependents. Some exceptions and special rules apply to divorced or separated parents, taxpayers with a multiple support agreement or those with a qualifying relative who is not your child.
See tax information about Parental Support
Types of expenses that qualify
You can deduct expenses primarily paid for the diagnosis, cure, mitigation, treatment or prevention of disease, or treatment affecting any structure or function of the body. For drugs, you can only deduct prescription medication and insulin. You can also include premiums for medical, dental and some long-term care insurance in your expenses. Starting in 2011, you can also include lactation supplies.
Transportation costs may qualify
You may deduct transportation costs primarily for and essential to medical care that qualify as medical expenses. You can deduct the actual fare for a taxi, bus, train, plane or ambulance as well as tolls and parking fees. If you use your car for medical transportation, you can deduct actual out-of-pocket expenses such as gas and oil, or you can deduct the Standard mileage rate for medical expenses. The rates change there are two rates for each half of 2011 the medical mileage allowance rates are January to end of June.
Also see the Standard mileage rate for medical deductions from July 1, through December 31.
Tax-favored saving for medical expenses
Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if used to pay qualified medical expenses including prescription medication and insulin.
See IRS publication 502 for more details.
For some good information about Health Savings Accounts and other tax-favored tax plans see the IRS Publication 969