How do tax deductions work for medical expenses in 2013?

The federal Patient Protection and Affordable Care Act enacts several tax changes for 2013.  The individual taxpayer's medical deduction remains pretty much the same as for previous years.  Medical expenses are not automatic tax deduction.  Few taxpayers receive a tax benefit for out of pocket medical expenses. 

First, the taxpayer must itemize deductions.  Taxpayers claiming the standard deduction do not get additional medical deductions.  Second, the sum of the medical expenses must be more than 10% of the adjusted gross income.  For a couple who makes $80,000 combined, that means that only the medical expenses after $8,000 are deductions.  (For 2013, if you or your spouse turns age 65 before the end of the year, the threshold is 7.50%. In that situation medical expenses after $6,000 are deductions.)  Lastly, the medical expense can not be reimbursed from an insurance or health savingds account.

If you are able to take a federal tax deduction for medical expenses, you also can receive a MA state tax deduction.

You can't deduct good health expenses like vitamins, yoga class or a vacation.  An allowable expense is the cost of prevention, diagnosis, cure, treatment or equipment and diagnostic devices for those purposes.

To be deductible, medical care expenses must be specific to relieve or prevent a physical or mental defect or illness.

The IRS typically allows medical expenses from qualified medical practitioners, such as acupuncturists, chiropractors, dentists, eye doctors, occupational therapists, physical therapists, podiatrists, psychiatrists, and psychologists.

Other medical deductions include

• Transportation costs to and from medical care. This includes parking and tolls.  Use of your car allows a 24 cent per mile deduction; so keep track of the mileage.
• Prescription medicines
• Long-term care services and some long-term care insurance premiums
• Amounts that you pay out of your pocket for medical, dental and vision insurance premiums and Medicare.

Expenses that are NOT allowed as medical deductions include

• Cosmetic surgery that is unrelated to a congenital abnormality, an accident, or a disease
• Funeral expenses
• Nursing care for a healthy baby
• Self employment and household employee taxes
• Drugs not approved by the FDA
• Medicine not prescribed by your doctor