Medical Expense Deductions: When You Can Claim Them

Medical expense deductions reduce taxable income by the amount of qualifying medical and dental costs that exceed 7.5% of your adjusted gross income (AGI), but only if you itemize on Schedule A of Form 1040. This guide explains which expenses qualify, how to calculate the deductible amount, useful recordkeeping practices, timing strategies I use in practice, and common pitfalls to avoid. Authoritative guidance follows IRS Publication 502 and IRS Topic No. 502 (links included below).

How the deduction works (step-by-step)

1. Determine whether you will itemize. Medical expense deductions are available only if you itemize deductions on Schedule A. If your total itemized deductions (including state and local taxes, mortgage interest, charitable gifts, etc.) are less than the standard deduction for your filing status, itemizing usually won’t save tax. For help weighing this decision, see FinHelp’s guide to how to decide whether to itemize or use the standard deduction.

2. Add up qualifying medical expenses paid during the tax year. Qualifying costs are unreimbursed expenses you actually paid in the tax year for medical care for yourself, your spouse, and your dependents (as defined by the IRS). Keep exact dates and proof of payment.

3. Calculate the 7.5% AGI floor. Multiply your AGI by 7.5% (0.075). Only the portion of your qualifying medical expenses that exceeds this floor is deductible.

4. Report on Schedule A (Form 1040). Enter the total qualifying medical expenses, subtract the AGI floor amount, and transfer the deductible portion to the itemized deduction total.

Example

• AGI: $60,000
• Total qualifying medical expenses paid: $20,000
• 7.5% of AGI: $4,500
• Deductible medical expense: $20,000 − $4,500 = $15,500

If your marginal tax rate is 22%, the federal income tax savings from the deduction (simplified) could be approximately $15,500 × 22% = $3,410 — but your actual savings depend on other tax factors and whether you itemize.

What counts as a qualifying medical expense

Eligible expenses generally include:

• Payments to doctors, dentists, surgeons, chiropractors, and other medical practitioners
• Hospital and nursing-home care for medical reasons
• Prescription drugs and insulin
• Certain long-term care services (subject to IRS rules)
• Medical equipment (crutches, wheelchairs, hearing aids)
• Insurance premiums you paid with after-tax dollars (including Medicare premiums in many cases)
• Transportation costs for medical care — mileage, tolls, parking, and lodging (when travel is mainly for, and essential to, medical care)

This list is not exhaustive. For a complete, authoritative list and limits, see IRS Publication 502 (Medical and Dental Expenses) and IRS Topic No. 502.

Tip from my practice: always separate out what was paid out-of-pocket versus paid by an HSA, FSA, or insurance. Amounts reimbursed or paid with pre-tax dollars (for example, HSA distributions used to pay medical expenses are tax-exempt if rules are followed) cannot be counted again as itemized medical expenses.

Internal link: For a focused discussion of which items count and documentation tips, see FinHelp’s Medical Expense Deductions: What Counts and How to Document.

Common non-deductible items (or limited)

• Most cosmetic surgery (unless it is necessary to improve a deformity from a congenital abnormality, injury, or disfiguring disease)
• Over-the-counter medicines without a doctor’s prescription (rules can change; keep prescriptions and EOBs)
• General wellness costs (gym membership, vitamins) unless specifically prescribed for a diagnosed medical condition
• Reimbursements from insurance, employer plans, or other sources

Interaction with HSAs, FSAs, and insurance

• HSA/FSA: If you paid for medical care using funds from a Health Savings Account (HSA) or Flexible Spending Account (FSA), those costs aren’t eligible for an additional itemized deduction because the tax benefit was taken earlier (pre-tax or tax-deductible contributions). In my experience, taxpayers often double-count — don’t.

• Insurance reimbursements: Do not include costs that were reimbursed or that you expect will be reimbursed. If you receive reimbursement in a later year, you may need to adjust earlier filings if the deduction created a tax benefit and the repayment is significant.

Timing strategies — “bunching” and other planning moves

• Bunching: If your medical expenses are close to the 7.5% floor in a single year, consider accelerating or delaying elective procedures or deductible expenses into a single tax year to exceed the threshold and make itemizing worthwhile. This strategy is commonly effective for couples who can coordinate scheduling.

• Multi-year planning: Keep a rolling view of anticipated major expenses (dental work, surgeries, fertility treatments) and compare the tax benefit of grouping them into one year versus spreading costs.

• Use with caution: Never schedule medical care solely for tax reasons if it creates medical or financial harm. Tax planning should be a secondary consideration to medical need.

Recordkeeping and documentation (audit-ready)

Good records are the single most important defense if the IRS asks questions. Keep the following for at least three years (longer if you have complex claims or state differences):

• Receipts and invoices that show date of service, provider name, service type, and amount paid
• Canceled checks, bank or credit card statements showing payment
• Insurance Explanation of Benefits (EOBs) showing what was paid and what you owe
• Prescriptions and doctor’s notes when expenses are medically necessary
• Mileage log or other travel documentation when deducting medical transportation costs

Internal link: See FinHelp’s guide on documentation best practices for medical expenses for downloadable checklists and sample logs.

How to calculate and report: quick checklist

• Confirm you will itemize rather than take the standard deduction
• Total all qualifying unreimbursed expenses paid during the tax year
• Multiply your AGI by 7.5% and subtract that amount from your total expenses
• Report the excess on Schedule A (Medical Expenses line) and include supporting documentation if requested

State taxes and differences

State tax rules often differ from federal rules. Some states follow the federal AGI floor; others have lower thresholds or exclude certain items. Always check your state’s tax guidance or consult a tax professional. FinHelp’s articles on state differences can help you compare state versus federal treatment.

Audits and red flags

• Exact, consistent records reduce audit risk. Large, round-dollar claims without receipts are more likely to attract attention.
• Reimbursed expenses claimed as deductions are a common audit trigger. Never claim amounts you received back.
• If audited, the IRS will look for proof the expense was primarily for medical care, dates, providers, and evidence you paid the expense.

Real-world examples and calculations

Example 1 — Family with high expenses

• AGI: $100,000
• Medical expenses paid: $12,000
• 7.5% of AGI: $7,500
• Deductible amount: $12,000 − $7,500 = $4,500

Example 2 — Timing decision

A taxpayer has $6,000 in predictable dental work. Their AGI is $50,000 (7.5% = $3,750). If they schedule an additional $2,000 of dental work in the same year, they would exceed the floor and get a larger deduction than if they split care across two years. Consider cash-flow, clinical readiness, and insurance factors before adjusting timing.

Common mistakes to avoid

• Failing to subtract reimbursements before claiming expenses
• Including expenses paid with pre-tax dollars (HSA/FSA) in the total
• Forgetting travel, parking, and tolls related to medical care
• Neglecting to compare itemizing vs. the standard deduction each year

Where to get authoritative guidance

• IRS Publication 502, Medical and Dental Expenses: https://www.irs.gov/publications/p502
• IRS Topic No. 502: https://www.irs.gov/taxtopics/tc502
• IRS standard mileage rates (for medical travel): https://www.irs.gov/newsroom/standard-mileage-rates
• Consumer Financial Protection Bureau explanation of medical expense deductions: https://www.consumerfinance.gov/ask-cfpb/what-are-medical-expense-deductions-en-1531/

Practical notes from my experience

In my practice I’ve seen taxpayers leave dollars on the table by not combining expenses strategically or by miscounting reimbursements. I routinely recommend keeping a rolling file for medical costs (receipts, EOBs, intent-to-pay notes) and reviewing itemizing versus standard deduction each year — especially after a major medical event.

Disclaimer

This article is educational and does not constitute tax advice. Tax rules are individual and change over time. For personalized guidance, consult a qualified tax professional or CPA.