What You Need to Know About Deduction of Medical Expenses for Senior Citizens
Medical Expenses Tax Deduction for Senior Citizens
Can Seniors Deduct Medical Expenses from Their Taxes?
Out-of-pocket medical expenses are costs that can escalate rapidly. The good news is that some of these expenses can be claimed on your taxes. The important factors to consider are that the expenses must be itemized and be more than 7.5% of your adjusted gross income (AGI).
Itemized deductions are a big category for a lot of types of expenses. These often include deductions such as medical and dental expenses. Other itemized deductions can be state and local taxes, charitable contributions, mortgage interest, and property taxes.
According to the IRS, the part of your medical and dental expenses that exceeds 7.5% is the part that can be deducted, and only if it is itemized.
If you’ve had a hospital stay or a costly year with medical expenses, these costs can add up quickly. However, if you have had minimal expenses, consider the standard IRS deduction. This may be simpler and easier.
Talk with your accountant or financial advisor to determine the best approach for your unique circumstances.
How Much of Senior Taxes Be Deducted for Medical Expenses?
When it comes to the deduction of medical expenses for senior citizens, the number you will hear over and over is 7.5%. According to the IRS, you can deduct only the part of your medical and dental expenses which exceeds 7.5% of the amount of your adjusted gross income.
Before 2018, seniors could deduct medical expenses that exceeded 10% of their AGI. This was lowered and the current threshold is now the number you’re hearing; 7.5%.
The standard deductions increased in 2018. According to the Tax Foundation, before 2018, only about one-third of people itemized their taxes. Even after the change took place, under 14% of taxpayers itemized their medical expenses.
However, if you’re in retirement and your taxable income has lowered your AGI to a point where the deduction is allowed, it can be a useful tool. If you’ve spent a great deal on health care in the previous tax year, you may find it valuable to save receipts and add up the totals. You may be able to save some money or get a return on your taxes when you file.
The guidelines for IRS rules and regulations are often updated. Social Security, Medicare, retirement changes, and deductibles can all impact your taxes. To make sure you have the latest information, be sure to review the current guidelines.
If numbers, receipts, and tax law is not your strong suit, don’t get stressed. There are several organizations dedicated to helping senior citizens understand what medical expenses are tax-deductible. Later in this article, you’ll find a handy list of organizations that may be able to assist you with evaluating your best options and filing your tax return.
What Medical Expenses Are Tax-Deductible?
Of course, as you look into expenses, it helps to know exactly what medical expenses deduction for senior citizens includes. Typically, these include items such as:
- Hospital service fees such as lab work, therapy, nursing services, surgery
- Medical services fees from dentists, doctors, surgeons, specialists
- Items including false teeth, eyeglasses, hearing aids, artificial limbs
- Equipment such as oxygen, and wheelchairs
Additional tax-deductible medical expenses include prescription drugs and insulin. Nursing home care including meals and lodging is typically deductible if the stat is required for medical care. A tax-deductible is qualified long-term care as well as transportation and car expenses to and from medical care.
Some of the expenses of Medicare may also fall into the tax-deductible category. Generally Medicare Part A premium is deductible if you aren’t covered by Social Security. Also included are Medicare Part B and Medicare Part D Premium
In some cases, there may be costs that you can deduct that may not be covered by your health insurance plan. Talk with your accountant to determine if you can deduct laser vision corrective surgery. You might be able to deduct rehab programs such as substance abuse treatment programs for alcohol or drug rehab.
Even if you have paid out-of-pocket for these treatments, there may be some tax relief to find by itemizing these costs.
To make sure that you are getting all the tax benefits for seniors that you are entitled to, be sure to double-check. The IRS offers a complete list of approved dental and medical expenses. Don’t leave out anything that you are entitled to claim.
What Medical Expenses Are Not Tax-Deductbile?
There are special rules for seniors when deducting medical expenses. Not all medical expenses are tax-deductible. Check to make sure that you are not including items that are not covered as tax-deductible.
These expenses may seem like they should be included, but unfortunately, they are not. According to the IRS, the IRS does not cover:
- Life insurance or income protection policies
- Pre-taxed flexible spending account reimbursements for medical expenses
- Health savings account payments for medical expenses
While you can make the argument for cosmetic surgery, unfortunately, the IRS does not cover cosmetic surgery. Similarly, it may seem that end-of-life necessities should be a justifiable medical expense, but the IRS does not include expenses for a funeral, burial, or cremation expenses as being tax-deductible.
It is helpful to know that non-prescription medicine is not included, except for insulin. Also not deductible are toiletries including cosmetics and toothpaste.
As odd as it may seem, even if your doctor told you to get more exercise, gym fees, and swimming lessons are not considered tax deductible. This means that health club fees, dues, and memberships are not included as tax-deductible expenses. Also not included are social exercises such as swimming lessons.
Qualifications for Medical Expense Tax Deductions
If you are 65 or over 65 years, you may be eligible to file the U.S. Tax Return for Seniors. The IRS form is called 1040-SR.
If you are a self-employed senior, you may have options. For example, if you’re a self-employed senior citizen and have had a profit, some types of health insurance premiums can be claimed as a health insurance deduction. These may include Medicare, Medicaid, Medigap, and qualified long-term health care.
These expenses may be useful as deductions towards your AGI (adjusted gross income) and are not part of the 7.5% rule.
According to the IRS, the elderly and disabled may qualify for an IRS credit.
With all these options for qualifications, it makes sense to get professional help. Talk with a financial advisor, your accountant, or a professional organization dedicated to helping seniors with medical expense tax deductions.
The good news about medical expenses tax deductions for senior citizens is that you don’t have to do it alone. There are many organizations available to help seniors prepare medical expense tax deductions.
How to File for Medical Expense Tax Deductions
If you’re not feeling one hundred percent sure about how to file for medical expense tax deductions, you are not alone. The good news is that many organizations exist that offer free tax services to help seniors prepare their returns.
Check out all the resources for tax preparation help for senior citizens.
In the United States, you may find one or more of these organizations can help you ease the stress and file your returns correctly and on time.
AARP Foundation Tax-Aide offers free tax assistance to low and moderate-income senior taxpayers. You must be age 50 or older to use this service. You can use the AARP Foundation Tax-Aide Locator to find services that are available in your area.
IRS Free File program is also known as Free File Alliance. This is a partnership between tax preparers and software companies to provide federal tax return preparation without charging a fee.
Tip: check to make sure the company offers this service free of both state and federal charges. Not all IRS Free File partners provide free state tax return preparation.
Tax Counseling for the Elderly (TCE) is an IRS program that specializes in assisting taxpayers over 60 years of age. The primary focus is helping people with questions about pensions and retirement issues. The TCE volunteers are certified by the IRS to provide free assistance and basic income tax return preparation to qualified people.
Volunteer Income Tax Assistance (VITA) is a program offered through the IRS to help qualified people with free tax return assistance. The program is geared toward people with disabilities, low to moderate incomes, and speaking limited English.
MilTax is a free tax service for veterans and members of the U.S. Armed Forces. It is offered through the Department of Defense, Military One Source.
Learn More About Your Medical Expenses and Tax Deductions
Here at the Senior Assistance Club, we encourage you to explore your medical expenses and tax deductions. As there are special rules for what senior citizens can deduct for medical expenses, you could be spending more on taxes than you need to. You may be eligible to save more money on your taxes.