Itemized Deduction of Medical Expenses for 2013: 10%

published July, 2013

Not everyone who files an individual tax return itemizes deductions on their Form1040. There is a standard deduction set each year ($6,100 Single, $12,200 MFJ for 2013), and you generally take either itemizing or standard deduction, whichever is greater, and you get to decide each year (generally).

The kinds of expenses that get itemized include such things as mortgage interest, property tax, charitable donations, etc. One of the calculated deductions is medical expenses, including health insurance, provided you don’t take the self employed health insurance deduction elsewhere on the return (which is generally a better deal for those who qualify). The medical expenses that are deducted in order to calculate the total itemized deductions is limited—I guess the thinking is that everyone has SOME medical expenses, and it’s only when you’ve got lots of medical expenses that you can start to deduct them from your taxable income. What’s “lots?” it’s defined by a percentage of your adjusted gross income. For many years prior to 2013, we’ve used 7.5% of AGI as the floor. If you have more medical expenses than 7.5% of your AGI, the overage starts to count towards itemized deductions. Well, starting in 2013, the floor is 10% of AGI. That’s what’s new.

For example, if your AGI is $100,000, you have to have more than $10,000 of medical expenses to start counting medical expenses towards an itemized deduction total—to see if your itemized deductions are more than the standard deduction. So you’d need medical expenses of $16,101 to have $1 more than the standard deduction as a single person, if you had no other itemized deductions.

Confused? If you have a lot of medical expenses, let me know. If you’re not sure, let me know how much you’ve spend on medical expenses, and medical insurance (including long term care) separately.

Some medical expenses are NOT deductible. If you have over the counter drugs or homeopathic remedies, they are generally not deductible. If you buy drugs from Canada or Mexico without a prescription (because they’re cheaper), they’re generally not deducible. The massage may make you feel more healthy, but generally is not deductible. Get an MD to write you a prescription, and generally, it IS deductible.

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