It may be easier to qualify for a medical deduction in 2018 than before, assuming you’ll itemize deductions. Specifically, the threshold for deducting unreimbursed medical and dental expenses has been lowered to 7.5 percent of adjusted gross income (AGI). That means only the excess amount above the threshold is deductible.
At the same time, other tax law changes increasing the standard deduction and reducing the tax benefits of itemized deductions might complicate your tax situation. As a result, a sizable medical deduction could tilt the scales in favor of itemizing.
Look beyond typical medical deductions
Certainly, you should bunch medical expenses in 2018 when it suits your needs. But you don’t have to only count on typical costs for doctor visits and prescription drugs.
Deductions for a wide variety of less common expenses have been approved by the IRS or the courts in the past, including amounts paid for the following:
- Alcoholism treatment
- Artificial teeth
- Birth control pills
- Breast pumps and supplies
- Guide dogs and other service animals
- Hearing aids
- Lead-based paint removal
- Medical care for transplant donors
- Oxygen and oxygen equipment
- Pregnancy tests
- Psychiatric care
- Smoking-cessation programs
- Special diet foods prescribed by physician
- Telephone equipment for the disabled
- Wigs for mental health purposes (e.g., to compensate for loss of hair due to an illness or medical treatment)
Note that the costs may be large or small. For instance, deductions have been allowed for installing a swimming pool to alleviate the taxpayer’s asthma as well as clarinet lessons to correct a child’s overbite.
Remember that the medical deduction threshold reverts to 10 percent-of-AGI in 2019. If you expect to clear the 7.5-percent mark in 2018 and will still be itemizing, move nonemergency expenses like medical exams and dental cleanings into this year. Otherwise, defer elective expenses to 2019, when you might have a shot at a deduction.
Contact Dye & Whitcomb, Fort Collins, CO CPAs if you’d like help determining your tax savings with your medical deductions.