Disclaimer: The author of this post is not in any way a certified tax professional. Please check the fine print and see a certified professional for information specific to your tax questions.
It’s that time of year again…tax time. For me, the process of doing taxes is ever an evolving process. Each year, it seems, I learn something totally new – and usually give myself a swift kick in the rear for not finding out about it sooner. If you have lupus or any other chronic illness, then your best friend during this (and every) tax season is the IRS’s guide to medical deductions. It can be a huge help in managing all the expenses that come with a chronic illness that aren’t covered by your insurance – if you understand how to use it.
The Quick and Dirty Guide to Medical Deductions
The 7.5% Rule
There’s a huge list of items that you can deduct from your taxes, but there’s a caveat as well: the amount you claim for deduction must be higher than 7.5% of your AGI. Think of a coupon deal where you can take off $10 dollars from your purchase, but only if your purchase if over $50. If everything rings up to $49.99, then that coupon isn’t worth the paper it’s printed on. It’s the same principle – if the total of your medical deductions are less than 7.5% of your AGI then you can’t deduct anything. So the name of the game as it were, is to hit that 7.5% mark.
Getting Started – Basic Deductions
To get an idea of whether or not you qualify to deduct your medical expenses, you’re first step is to total your AGI for 2011 and figure out what your 7.5% target is going to be. The IRS website gives an example; if your AGI was $40,000, then your target is $3,000 in medical expenses.That’s the number you need to exceed. If you only have $1,500 or even $2,999 then you won’t be able to get any money back for those deductions.
Once you have your target number, you’ll want to start totaling your medical expenses for the year. Below is a brief list of some of the most obvious and common deductions that you’re allowed. For the full list and all the fine print, click here or search for IRS publication 502.
- Ambulance Services
- Artificial Limbs or Teeth
- Contact Lenses or Glasses
- Non-Cosmetic Dental Treatment
- Eye Exams
- Eye Surgery
- Fertility Treatments
- Service Animals
- Medical Insurance Premiums
- Hearing Aids
- Home Care
- Hospital Services
- Laboratory Fees
- Psychoanalysis, Psychiatric Care and treatments by a Psychologist
Again, you’ll want to read the fine print on the IRS website, as some deductions have certain requirements to qualify. For example, you can deduct the cost of your routine, annual check-up – if it’s not already covered by your insurance or some other source. Also, the deduction for psychoanalysis is not eligible if those payments were part of training to become a psychoanalyst. And course, all deductible expenses have to medically necessary to your treatment.
Deductions You Might Not Know About
Publication 502 has the complete list of deductions and, in reading it, I was surprised to find a bunch of deductions that I would never have thought of. Here are a few hidden gems that can be really useful for chronic illness sufferers.
- Bandages and other medical supplies.
- Capital Expenses (covers special equipment installed in your home for medical reasons as well as any changes you make to you home for medical reasons – the IRS site has a whole section and worksheet to calculate these properly).
- Christian Science Practitioner.
- Diagnostic Devices (for example if you need to purchase a blood sugar test kit to monitor for diabetes, you can deduct the cost of the kit if it wasn’t covered by your insurance).
- Lead-Based Paint Removal.
- Long-Term Care Services (they have a special subsection just for chronically ill individuals).
- Travel and Admission to Medical Conferences.
- Medical Information Plans (this might cover online medical records as well).
- Osteopathic Treatment (Osteopathy is a specific style of alternative medicine. You can read more about it on the American Association of Colleges of Osteopathic Medicine website.)
- Stop Smoking and Alcohol Abuse Programs (this just covers the actual programs, any over-the-counter aids such as nicotine patches don’t apply).
- Transportation to and from medical care appointments (another detailed subsection that you should read).
- Trips to other cities, if the trip’s primary purpose is receiving medical treatment (this can include lodging and meals under certain circumstances).
- Weight-Loss Programs (only if the program is prescribed by a doctor and does not include gym membership).
- Medical Expenses paid for a dependent, or spouse.
If your income is below $50,000, you qualify for free tax assistance to help you sort through all your possible medical deductions. The IRS website has a list of resources to help you find one in your area. You can also download Publication 502 with the complete information regarding medical deductions below by clicking on the icon and saving the file to your computer.
Do you have any other tax tips for lupies? Let me know in the comments below. Also, get new posts via email by subscribing today!