You Can Use Large Medical Expenses as a Tax Deduction, But There’s a Catch
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Here's your money briefing for Friday, March 17th.
What types of medical expenses can be deducted on your tax return?
I'm J.R. Whelan for The Wall Street Journal. It's mid-March, so chances are you're getting ready to file your tax return and looking for ways to reduce your bill. One area of potential savings that's often overlooked is large-scale medical expenses.
It could be all kinds of things that relate to health and expenses for health or for illness.
Wall Street Journal tax reporter Laura Saunders will be here to run through the list of eligible deductions. And a few of those deductions may surprise you. That's after the break.
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How do unreimbursed medical costs become itemized deductions?
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There are some unexpected ways you can reduce your tax bill. A few have to do with medical expenses. WSJ tax reporter Laura Saunders went through the list of expenses that qualify, and she joins me now. Hey, Laura, thanks a lot for being here.
Well, thanks for having me.
So, Laura, you know, for a lot of people, medical expenses are covered by insurance. So how can these expenses make their way onto someone's tax return?
I would say that not all medical expenses are covered by insurance.
Which surprising home improvements (like pools or elevators) can qualify as medical deductions?
And if they're not covered by insurance, if they're unreimbursed, they might be able to be deductible as medical expenses on your tax return on Schedule A as an itemized deduction.
I guess we're talking about more than just the cost of a doctor's visit.
Yes, we are. It could be all kinds of things that relate to health and expenses for health or for illness. And for instance, we point out that the cost of a home elevator, if someone is disabled, could be deductible. Now, that's not a small cost. Also, tuition, maybe $50,000 of tuition a year to a special needs school, fees for assisted living and nursing homes and things like that, and also even a swimming pool.
Well, hold on. A swimming pool? You put a pool in the backyard and it's deductible?
I've heard of more than one that was deductible. It may not be fully deductible. But in the case that I'm thinking of, the CPA had a client who was building a house and putting in a pool recommended by a doctor for a family member's chronic illness. Now, that's not great to have a chronic illness, but it is nice to have a swimming pool.
What documentation is required to deduct home modifications for medical reasons?
And so the cost of that was deductible.
Okay, so these are things that are serving a medical need. So you can't just put a pool in. You have to have some sort of a doctor's note?
Yes, you do. And you also have to have an appraisal of the home's value before and after you make the improvement, like the elevator or the swimming pool. And if it increases the value of your home, you have to subtract that from the deduction.
All right, so what else qualifies for the deduction?
Oh, just so many things, large and small, including, for instance, bandages, breast pumps, guide dogs, contact lenses and contact lens solution, dentures, stop smoking programs, obesity treatment, all kinds of things like that.
Bandages. So if I buy bandages, can I just turn around and deduct those?
Well, I don't think you can deduct Band-Aids.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:00–0:36
2
What types of medical expenses can be deducted on your tax return?
0:36–1:35
3
How do unreimbursed medical costs become itemized deductions?
1:35–2:15
4
Which surprising home improvements (like pools or elevators) can qualify as medical deductions?
2:15–3:24
5
What documentation is required to deduct home modifications for medical reasons?
3:24–5:22
6
Which everyday items (breast pumps, contact lenses, bandages) are eligible for deduction?
5:22–8:31
7
What are the filing and AGI thresholds that limit medical expense deductions?
8:31–9:54
Speakers
3 identifiedMore from WSJ Your Money Briefing
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