If you’re like most Americans, you have health insurance. In fact, 76% of Americans under 65 have a health plan through their employer or are on Medicare or Medicaid. That’s great news for us because it means we won’t have to pay as much out-of-pocket for medical expenses when we get sick or hurt! But there is a downside: tax breaks don’t come for free. If your income is too high and/or not enough of your medical bills are “deductible,” then claiming them on your taxes will actually cost you money instead of saving it (which kind of defeats the purpose). So what does it mean? Basically, if you make too much money or spend too much on things that aren’t deductible in any way, shape or form, you can’t write off those expenses at all during tax season. Read more below about what counts as a deductible expense and how much money can be saved by writing off as many deductions as possible (because who doesn’t want more money in their pockets?).
Your ability to deduct health care costs depends in part on how much you spend on healthcare and in part on how much money you make.
A few factors determine the deduction you can take for medical expenses. First, the size of your medical expenses must be large enough that they exceed 10% of your income (7.5% if you’re self-employed).
You may be able to write off some of your medical expenses, depending on how much money you make and how much you spent on healthcare during the course of the year.
In order to write off any medical expenses, you must first meet the threshold that allows you to deduct them in the first place. The threshold is generally 10% of your adjusted gross income (AGI), but it can drop to 7.5% if you’re 65 years of age or older and retired. If your income makes it under that limit, then you’ll have some wiggle room with which to claim deductions for things like physical therapy, supplements, hearing aids and other medical equipment.
If your income exceeds this threshold for whatever reason—maybe because another person claimed you as a dependent on their tax return—then don’t worry about filing for a deduction or feeling bad about not being able to do so this year: You’ll still be able to write off some medical bills next time around!
If you have questions about whether or not your healthcare costs are deductible, contact Care Financial. The process can be confusing, but our experts can help you find out which deductions apply to your situation and which ones don’t.