7.5%-of-AGI limitation applicable to taxpayer or spouse 65 or older for figuring deductible medical and dental care expenses expired.Beginning in 2017, the 10% limitation is applicable to all taxpayers.
This chapter will help you determine the following.
What medical expenses are.
What expenses you can include this year.
How much of the expenses you can deduct.
Whose medical expenses you can include.
What medical expenses are includible.
How to treat reimbursements.
How to report the deduction on your tax return.
How to report impairment-related work expenses.
How to report health insurance costs if you are self-employed.
Useful Items
You may want to see:
Publication
502Medical and Dental Expenses
969Health Savings Accounts and Other Tax-Favored Health Plans
Form (and Instructions)
1040 U.S. Individual Tax Return
Schedule A (Form 1040) Itemized Deductions
8885 Health Coverage Tax Credit
8962 Premium Tax Credit (PTC)
What Are Medical Expenses?
Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.
Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.
Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract.
What Expenses Can You Include This Year?
You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged.
Separate returns. If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise.
Community property states. If you and your spouse live in a community property state and file separate returns, or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Each of you should include half the expenses. If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. If you live in a community property state, and are not filing a joint return, see Pub. 555, Community Property.
How Much of the Expenses Can You Deduct?
Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your adjusted gross income (AGI), found on Form 1040, line 38. Text intentionally omitted.
Example. You are unmarried and your AGI is $40,000, 10% of which is $4,000. You paid medical expenses of $2,500. You cannot deduct any of your medical expenses because they are not more than 10% of your AGI.
Whose Medical Expenses Can You Include?
You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. There are different rules for decedents and for individuals who are the subject of multiple support agreements. See Support claimed under a multiple support agreement, later.
Spouse
You can include medical expenses you paid for your spouse. To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses.
Example 1. Mary received medical treatment before she married Bill. Bill paid for the treatment after they married. Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns.
If Mary had paid the expenses, Bill could not include Mary’s expenses in his separate return. Mary would include the amounts she paid during the year in her separate return. If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction.
Example 2. This year, John paid medical expenses for his wife Louise, who died last year. John married Belle this year and they file a joint return. Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year.
Dependent
You can include medical expenses you paid for your dependent. For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met.
The person was a U.S. citizen or national, or a resident of the United States, Canada, or Mexico. If your qualifying child was adopted, see Exception for adopted child, next.
You can include medical expenses you paid for an individual that would have been your dependent except that:
He or she received gross income of $4,050 or more in 2017,
He or she filed a joint return for 2017, or
You, or your spouse if filing jointly, could be claimed as a dependent on someone else’s 2017 return.
Exception for adopted child. If you are a U.S. citizen or U.S. national and your adopted child lived with you as a member of your household for 2017, that child does not have to be a U.S. citizen or national or a resident of the United States, Canada, or Mexico.
Qualifying Child
A qualifying child is a child who:
Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew),
Was:
Under age 19 at the end of 2017 and younger than you (or your spouse, if filing jointly),
Under age 24 at the end of 2017, a full-time student, and younger than you (or your spouse, if filing jointly), or
Any age and permanently and totally disabled,
Lived with you for more than half of 2017,
Did not provide over half of his or her own support for 2017, and
Did not file a joint return, or, if he or she did, it was only to claim a refund.
Adopted child. A legally adopted child is treated as your own child. This includes a child lawfully placed with you for legal adoption.
You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid.
If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child.
But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses.
Child of divorced or separated parents. For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child’s dependency exemption, if:
The child is in the custody of one or both parents for more than half the year,
The child receives over half of his or her support during the year from his or her parents, and
The child’s parents:
Are divorced or legally separated under a decree of divorce or separate maintenance,
Are separated under a written separation agreement, or
Live apart at all times during the last 6 months of the year.
This does not apply if the child’s exemption is being claimed under a multiple support agreement (discussed later).
Qualifying Relative
A qualifying relative is a person:
Who is your:
Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild),
Brother, sister, half brother, half sister, or a son or daughter of either of them,
Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle),
Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or
Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law,
Who was not a qualifying child (see Qualifying Child, earlier) of any other person for 2017, and
Support claimed under a multiple support agreement. If you are considered to have provided more than half of a qualifying relative’s support under a multiple support agreement, you can include medical expenses you pay for that person. A multiple support agreement is used when two or more people provide more than half of a person’s support, but no one alone provides more than half.
Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. However, you can include the entire unreimbursed amount you paid for medical expenses.
Example. You and your three brothers each provide one-fourth of your mother’s total support. Under a multiple support agreement, you treat your mother as your dependent. You paid all of her medical expenses. Your brothers repaid you for three-fourths of these expenses. In figuring your medical expense deduction, you can include only one-fourth of your mother’s medical expenses. Your brothers cannot include any part of the expenses. However, if you and your brothers share the nonmedical support items and you separately pay all of your mother’s medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses.
Decedent
Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent’s final income tax return. This includes expenses for the decedent’s spouse and dependents as well as for the decedent.
The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent’s estate for the decedent’s medical care as paid by the decedent at the time the medical services were provided. The expenses must be paid within the 1-year period beginning with the day after the date of death. If you are the survivor or personal representative making this choice, you must attach a statement to the decedent’s Form 1040 (or the decedent’s amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return.
Amended returns and claims for refund are discussed in chapter 1.
What if you pay medical expenses of a deceased spouse or dependent? If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Schedule A (Form 1040) in the year paid, whether they are paid before or after the decedent’s death. The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses.
What Medical Expenses Are Includible?
Use Table 22.1 as a guide to determine which medical and dental expenses you can include on Schedule A (Form 1040).
This table does not include all possible medical expenses. To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses, earlier.
Insurance Premiums
You can include in medical expenses insurance premiums you pay for policies that cover medical care. Medical care policies can provide payment for treatment that includes:
Hospitalization, surgical services, X-rays,
Prescription drugs and insulin,
Dental care,
Replacement of lost or damaged contact lenses, and
Long-term care (subject to additional limitations). See Qualified Long-Term Care Insurance Contracts in Pub. 502.
Premium tax credit. When figuring the amount of insurance premiums you can deduct on Schedule A, don’t include the amount of net premium tax credit you are claiming on Form 1040.
If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement.
Employer-sponsored health insurance plan. Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included on your Form W-2. Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included on your Form W-2.
Example. You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money.
Long-term care services. Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. This amount will be reported as wages on your Form W-2.
Retired public safety officers. If you are a retired public safety officer, do not include as medical expenses any health or long-term care premiums that you elected to have paid with tax-free distributions from your retirement plan. This applies only to distributions that would otherwise be included in income.
Health reimbursement arrangement (HRA). If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. This is because an HRA is funded solely by the employer.
Medicare A. If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. The payroll tax paid for Medicare A is not a medical expense.
If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. In this situation you can include the premiums you paid for Medicare A as a medical expense.
Medicare B. Medicare B is supplemental medical insurance. Premiums you pay for Medicare B are a medical expense. Check the information you received from the Social Security Administration to find out your premium.
Medicare D. Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. You can include as a medical expense premiums you pay for Medicare D.
Prepaid insurance premiums. Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are:
Payable in equal yearly installments, or more often, and
Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years).
Unused sick leave used to pay premiums. You must include in gross income cash payments you receive at the time of retirement for unused sick leave. You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer’s health plan after you retire. You can include this cost of continuing participation in the health plan as a medical expense.
If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. You cannot include this cost of continuing participation in that health plan as a medical expense.
Meals and Lodging
You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to get medical care. See Nursing home, later.
You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. You can include the cost of such lodging while away from home if all of the following requirements are met.
The lodging is primarily for and essential to medical care.
The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital.
The lodging is not lavish or extravagant under the circumstances.
There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.
The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. You can include lodging for a person traveling with the person receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Meals are not included.
Nursing home. You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care.
Do not include the cost of meals and lodging if the reason for being in the home is personal. You can, however, include in medical expenses the part of the cost that is for medical or nursing care.
Transportation
Include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. You can include:
Bus, taxi, train, or plane fares, or ambulance service,
Transportation expenses of a parent who must go with a child who needs medical care,
Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and
Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment.
Car expenses. You can include out-of-pocket expenses, such as the cost of gas and oil, when you use your car for medical reasons. You cannot include depreciation, insurance, general repair, or maintenance expenses.
If you do not want to use your actual expenses for 2017, you can use the standard medical mileage rate of 17 cents per mile.
You can also include parking fees and tolls. You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate.
Example. In 2017, Bill Jones drove 2,800 miles for medical reasons. He spent $500 for gas, $30 for oil, and $100 for tolls and parking. He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction.
He figures the actual expenses first. He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630.
He then figures the standard mileage amount. He multiplies 2,800 miles by 17 cents a mile for a total of $476. He then adds the $100 tolls and parking for a total of $576.
Bill includes the $630 of actual car expenses with his other medical expenses for the year because the $630 is more than the $576 using the standard mileage amount.
Transportation expenses you cannot include. You cannot include in medical expenses the cost of transportation in the following situations.
Going to and from work, even if your condition requires an unusual means of transportation.
Travel for purely personal reasons to another city for an operation or other medical care.
Travel that is merely for the general improvement of one’s health.
The costs of operating a specially equipped car for other than medical reasons.
Disabled Dependent Care Expenses
Some disabled dependent care expenses may qualify as either:
Medical expenses, or
Work-related expenses for purposes of taking a credit for dependent care. (See chapter 33 and Pub. 503, Child and Dependent Care Expenses.)
You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction.
How Do You Treat Reimbursements?
You can include in medical expenses only those amounts paid during the taxable year for which you received no insurance or other reimbursement.
Insurance Reimbursement
You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. This includes payments from Medicare.
Even if a policy provides reimbursement for only certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse.
Example. You have insurance policies that cover your hospital and doctors’ bills but not your nursing bills. The insurance you receive for the hospital and doctors’ bills is more than their charges. In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses.
Health reimbursement arrangement (HRA). A health reimbursement arrangement is an employer-funded plan that reimburses employees for medical care expenses and allows unused amounts to be carried forward. An HRA is funded solely by the employer and the reimbursements for medical expenses, up to a maximum dollar amount for a coverage period, are not included in your income.
Other reimbursements. Generally, you do not reduce medical expenses by payments you receive for:
Permanent loss or loss of use of a member or function of the body (loss of limb, sight, hearing, etc.) or disfigurement to the extent the payment is based on the nature of the injury without regard to the amount of time lost from work, or
You do not have a medical deduction if you are reimbursed for all of your medical expenses for the year.
Excess reimbursement. If you are reimbursed more than your medical expenses, you may have to include the excess in income. You may want to use Figure 22.A to help you decide if any of your reimbursement is taxable.
Figure 22.AIs Your Excess Medical Reimbursement Taxable?
Premiums paid by you. If you pay either the entire premium for your medical insurance or all of the costs of a plan similar to medical insurance and your insurance payments or other reimbursements are more than your total medical expenses for the year, you have an excess reimbursement. Generally, you do not include the excess reimbursement in your gross income.
Premiums paid by you and your employer. If both you and your employer contribute to your medical insurance plan and your employer’s contributions are not included in your gross income, you must include in your gross income the part of your excess reimbursement that is from your employer’s contribution.
See Pub. 502 to figure the amount of the excess reimbursement you must include in gross income.
Reimbursement in a later year. If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you generally must report the reimbursement as income up to the amount you previously deducted as medical expenses.
However, do not report as income the amount of reimbursement you received up to the amount of your medical deductions that did not reduce your tax for the earlier year. For more information about the recovery of an amount that you claimed as an itemized deduction in an earlier year, see Itemized Deduction Recoveries in chapter 12.
Medical expenses not deducted. If you did not deduct a medical expense in the year you paid it because your medical expenses were not more than 10% of your AGI or because you did not itemize deductions, do not include the reimbursement up to the amount of the expense in income. However, if the reimbursement is more than the expense, see Excess reimbursement, earlier.
Example. For 2017, you were unmarried and you had $500 of medical expenses. You cannot deduct the $500 because it is less than 10% of your AGI. If, in a later year, you are reimbursed for any of the $500 in medical expenses, you do not include the amount reimbursed in your gross income.
Damages for Personal Injuries
If you receive an amount in settlement of a personal injury suit, part of that award may be for medical expenses that you deducted in an earlier year. If it is, you must include that part in your income in the year you receive it to the extent it reduced your taxable income in the earlier year. See Reimbursement in a Later Year, discussed under How Do You Treat Reimbursements, earlier.
Future medical expenses. If you receive an amount in settlement of a damage suit for personal injuries, part of that award may be for future medical expenses. If it is, you must reduce any future medical expenses for these injuries until the amount you received has been completely used.
How Do You Figure and Report the Deduction on Your Tax Return?
Once you have determined which medical expenses you can include, you figure and report the deduction on your tax return.
What Tax Form Do You Use?
You report your medical expense deduction on Schedule A (Form 1040). You cannot claim medical expenses on Form 1040A or Form 1040EZ. If you need more information on itemized deductions or you are not sure if you can itemize, see chapter 21.
Impairment-Related Work Expenses
If you are a person with a disability, you can take a business deduction for expenses that are necessary for you to be able to work. If you take a business deduction for impairment-related work expenses, they are not subject to the 10% limit that applies to medical expenses.
You have a disability if you have:
A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or
A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working.
Impairment-related expenses defined. Impairment-related expenses are those ordinary and necessary business expenses that are:
Necessary for you to do your work satisfactorily,
For goods and services not required or used, other than incidentally, in your personal activities, and
Not specifically covered under other income tax laws.
Where to report. If you are self-employed, deduct the business expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses.
If you are an employee, complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. Enter on Schedule A (Form 1040), that part of the amount on Form 2106, or Form 2106-EZ, that is related to your impairment. Enter the amount that is unrelated to your impairment also on Schedule A (Form 1040). Your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to other employee business expenses.
Example. You are blind. You must use a reader to do your work. You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. The reader’s services are only for your work. You can deduct your expenses for the reader as business expenses.
Health Insurance Costs for Self-Employed Persons
If you were self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, amounts paid for medical and qualified long-term care insurance on behalf of yourself, your spouse, your dependents, and your children who were under age 27 at the end of 2017. For this purpose, you were self-employed if you were a general partner (or a limited partner receiving guaranteed payments) or you received wages from an S corporation in which you were more than a 2% shareholder. The insurance plan must be established under your trade or business and the deduction cannot be more than your earned income from that trade or business.
You cannot deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer, your spouse’s employer, or an employer of your dependent or your child under age 27 at the end of 2017. You cannot deduct payments for a qualified long-term care insurance contract for any month in which you were eligible to participate in a long-term care insurance plan subsidized by your employer or your spouse’s employer.
If you qualify to take the deduction, use the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 Instructions to figure the amount you can deduct. But if any of the following applies, do not use that worksheet. Instead, use the worksheet in Pub. 535, Business Expenses, to figure your deduction.
You had more than one source of income subject to self-employment tax.
You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion.
You are using amounts paid for qualified long-term care insurance to figure the deduction.
Use Pub. 974 instead of the worksheet in the Form 1040 Instructions if you, your spouse, or a dependent enrolled in health insurance through the Health Insurance Marketplace and you are claiming the premium tax credit.
Note. When figuring the amount you can deduct for insurance premiums, do not include any advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. If you are claiming the HCTC, subtract the amount shown on Form 8885 from the total insurance premiums you paid.
Do not include amounts paid for health insurance coverage with retirement plan distributions that were tax-free because you are a retired public safety officer.
Where to report. You take this deduction on Form 1040. If you itemize your deductions and do not claim 100% of your self-employed health insurance on Form 1040, you can generally include any remaining premiums with all other medical expenses on Schedule A (Form 1040), subject to the 10% limit. See Self-Employed Health Insurance Deduction in Pub. 535 and Medical and Dental Expenses in the Instructions for Schedule A (Form 1040), for more information.
502 Medical and Dental Expenses
