In order to deduct medical expenses, taxpayers must itemize deductions and complete Form 1040 and Schedule A. Medical costs can be deducted for expenses you paid for yourself or any of your dependents, including your spouse. Only those costs in excess of a set percentage of your salary may be deducted. For 2010, that percentage is 7.5 percent of your adjusted gross income.
Payments to Practitioners
Allowable deductions include payments to physicians, dentists, psychologists, chiropractors, acupuncturists and Christian Science practitioners. Payments to hospitals, long-term care facilities, laboratories and for nursing services are also allowable. Inpatient care provided for addiction to alcohol or drugs is deductible. Weight reduction programs are allowable if recommended by a doctor to treat a specific condition. Cosmetic procedures are not typically deductible.
Payments for Medications
Only prescription drugs and insulin are deductible. Nicotine patches and gums are not deductible, nor are diet foods that replace normal meals.
Payments for Appliances and Equipment
Dentures, prescription eyeglasses. contact lenses, hearing aids, wheelchairs and crutches are allowable deductions. Guide dogs for those who are deaf or blind are deductible. Prosthetics for missing limbs are allowable. Oxygen and breathing equipment for a patient suffering from a respiratory condition can be deducted.
Payments for Transportation
You may deduct the cost of traveling to a medical conference that is related to a chronic disease from which you or one of your dependents suffers. Transportation costs to receive medical care are also deductible. If you drive yourself, you are allowed to deduct either a standard rate for actual mileage or the true costs involved. You can also deduct expenses for installing hand controls or special modifications to accommodate a disability.
Payments for Meals and Lodging
Lodging and meals paid to a hospital or facility may be deductible provided you are there primarily for medical treatment. You may also be able to deduct these costs if you must travel to receive treatment.
Payments for Health Insurance
You may deduct expenses for health insurance or for a qualified long-term care policy. Life and disability insurance policies are not deductible. You cannot deduct insurance payments that were made with pretax dollars, such as when you are a member of a Section 125 plan, unless these payments are included in your gross wages on your W-2 form. Those who are self-employed and who show a profit may be able to make an adjustment against income for the cost of health insurance.
Alterations to the Home
If it is necessary to make accommodations to your home for a disabled resident, these costs are deductible. Examples include ramps, increasing the width of doorways, installing pull-up bars or railings, or adjusting the height of counters.
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