Tax Planning? Medical Expense Deduction Becomes Less Generous in 2019
Although there’s a new higher standard deduction for U.S. taxpayers this year, tax professionals are cautioning taxpayers against automatically taking it. The 2017 tax legislation retains the deduction for medical expenses. This year, taxpayers can deduct medical expenses exceeding 7.5% of their Adjusted Gross Income (AGI), but that threshold will rise to 10% of the AGI in 2019, so taxpayers won’t be able to deduct as much. It would be a good idea to crunch the numbers now, to learn if itemizing and the medical expense deduction would reduce your taxes.
The deduction is especially important to people age 65 and over, since spending on medical expenses increases with age, and healthcare costs can be considerable. About 23 percent of participants in The Senior Citizens League’s 2018 Senior Survey said they routinely itemize medical expenses. A recent report from the non-partisan Kaiser Family Foundation says that Medicare households spent on average $5,355 in 2016 on healthcare costs that Medicare doesn’t cover. That’s equivalent to $5,700 in 2018 adjusting for inflation.
While you can count medical bills for you, your spouse and dependents listed on your tax return, you may also be able to count some medical expenses that you paid for a family member (such as a parent) who’s not considered a dependent for tax purposes. This is the sort of question you should discuss with a tax professional.
In addition to expenses such as out-of-pocket drug costs, and co-pays for visits to the doctor, here are a few of the most common overlooked medical deductions:
- Out-of-pocket costs for dental, vision, audio, physical therapy and other services not covered by Medicare or other health insurance. This also includes equipment and supplies, like glasses, hearing aid batteries, dentures and implants. (Find a complete list in IRS publication 502.)
- Medicare and other health insurance premiums, including Medigap supplements, Part D or Medicare Advantage plans, and long term care insurance, as long as an employer did not pay the premiums.
- Travel expenses to and from medical treatments. In 2018, the standard mileage rate for tax purposes is .18 cents per mile for medical purposes. Keep a travel log for documentation.
- Cost of alcohol or drug-abuse treatment.
- Medically necessary home remodeling. This can include ramps, making doors and hallways wider, adjusting electrical outlets, even grading exterior landscape to provide access to the house.
- Some home healthcare can be deductible. In order for home healthcare expenses to be deductible, those who require the care must be unable to perform two or more of six activities of daily living (such as bathing, and feeding yourself) and have a plan of care from a physician that specifies help with these tasks.
To learn more about deducting medical expenses, see IRS publication 502, which can be downloaded at www.IRS.gov.