It is very common to dislike paying medical bills even if you have very good insurance and a low deductible. One of the very bright sides of big medical bills is the chance you get to claim your medical expenditure as a deduction on the federal tax return. If your medical bills are more than 7.5% of your total tax years * the adjusted gross income (AGI) then it is quite feasible to itemize your deductions. The deductions on medical expenses are applicable for self, your spouse and for the medical expenditure of your dependents as well.
In case, your medical bills are more than 7.5% of the income you obtain you must follow the below-mentioned rules for maximization of your tax refund.
- Medical bills are not just ‘Medical’
The IRS would permit deductions on tax for vision and for dental care as well and also for the medical expenses too. This would imply that it is feasible to deduct the expenses incurred in the eye tests, dental-related visits, braces, contact lenses, glasses, root canal, etc.
Some other expenses which are covered under the category of medical expense deduction are psychological treatment, surgeries, medical devices such as hearing aids, medicines which have been prescribed, preventative care, etc.
Even the cost involved in your monthly payments of health insurance can be deducted if taxes have not been deducted by plans provided by the employer. The deduction for medical expenses would include the bills that have been incurred for yourself, your spouse and your dependents.
You must have a complete idea about what is not tax-deductible before you have filed the tax returns. Any expenses which have been reimbursed either by the insurance provider or by your employer cannot be claimed as tax deductions. Moreover, if you are using a pre-payment plan for your medical expenses or are using a medical reimbursement plan then those expenses cannot be claimed as deductions. Some other non-deductible items would include your every-day supplies like toothpaste, soap, vitamins, etc.
- Bill payment
Medical expenses can be deductible only if they are paid in the tax year in which you are filing the tax returns. Medical expenses can be claimed from the previous year or from any other future years. If a credit card has been used for the payment of medical bills in a tax year then it would be counted as being paid in a year and would be deductible as well.
- Medical expenses can be deducted if your tax deductions are itemized
If you wish to receive the benefits obtained from the deductions obtained from medical expenses you must qualify for itemizing your deductions obtained on your taxes. Some of your itemized deductions such as property tax, State Income tax, home mortgage interest, etc. along with those medical expenses which are deductible need to be more than the Standard Deduction for the year 2020. In case you are self-employed, you would be able to deduct your premium for health insurance even if you are not able to itemize your deductions.
- Track miles
You can track the medical mileage for the year 2020 and it is 17 cents for each mile. There can be travels related to the prescription pick up, emergency visits, appointments for the dentist and other medical check-up and follow up appointments.
Hence, if you have had medical expenditure during a particular tax year it would be completely worth it by maximizing your deductions and opting for itemized deductions. This would be helpful mainly when your itemized deductions are more than your standard deduction.