It's Tax Time: What to Know About Writing Off Injury Related Expenses

While taxes are a necessary part of life, many people overpay by failing to take deductions allowed under IRS regulations. Medical expenses are a prime example. While writing off allowable expenses can lower your tax bill, the numerous rules and exceptions are complex and often confusing. Which services are deductible? Can insurance premiums be written off? What about dental care? Keep more of your hard-earned dollars with this guide to deducting medical expenses on your income tax return.

WHAT ARE THE IRS GUIDELINES FOR WRITING OFF INJURY RELATED MEDICAL EXPENSES?

In general, taxpayers who itemize deductions may deduct unreimbursed medical expenses that exceed 7.5 percent of the Adjusted Gross Income listed on the return.

This means medical expenses covered under a health insurance policy are not tax- deductible. However, if the insurance payment is less than the provider’s charge for an eligible service, the patient can deduct the amount paid out-of-pocket.

Further, only medical services, medications and treatments that alleviate or prevent a specific physical or mental condition or illness are tax-deductible. Expenses for items or services that benefit general health, such as vitamins or spa visits, do not qualify.

When there is a specific medical condition, deductions may be taken for the cost of services related to the following:

• Diagnosis
• Cure
• Mitigation
• Treatment
• Prevention

In addition, the cost of items required for the above purposes may also be deducted, including:

• Equipment
• Supplies
• Diagnostic devices

DO SERVICES HAVE TO BE PROVIDED BY CERTAIN TYPES OF MEDICAL PRACTITIONERS TO QUALIFY FOR TAX DEDUCTIONS?

Deductions are permitted for eligible, unreimbursed services provided by a wide range of qualified medical practitioners, including but not limited to the following:

• Acupuncturists
• Chiropractors
• Dentists (excluding routine or cosmetic services)
• Surgeons
• Ophthalmologists and optometrists (excluding routine exams)
• Medical doctors (MDs) of all specialties

WHAT MEDICAL EXPENSES ARE ELIGIBLE FOR TAX WRITE-OFFS?

With the exception of health insurance premiums, medical services and medications must be related to the treatment or prevention of a specific mental or physical illness or condition in order to be tax-deductible. As stated earlier, expenses reimbursed by health insurance policies or other sources do not qualify for tax deductions.

Providing the above conditions are met, the following medical expenses may be tax-deductible:

• Qualified long-term care services
• False teeth
• Prescription eyeglasses or contact lenses
• Hearing aids
• Guide dogs or other service animals to assist individuals with visual or hearing impairments or other physical disabilities
• Crutches, wheelchairs and other necessary assistive devices
• And more…

NOTE: Certain other expenses related to nutrition, wellness, and general health may be eligible for tax deductions. For more information, visit the Frequently Asked Questions section of the IRS website.

WHAT KINDS OF MEDICAL EXPENSES ARE NOT ELIGIBLE FOR TAX DEDUCTIONS?

• Cosmetic surgery, unless it is related to:

  • Congenital abnormality
  • Accident
  • Disease

• Nursing care for a healthy baby

• Most drugs not approved by the FDA

• Funeral, burial, or cremation costs

• Most nonprescription medicines

• Toothpaste, toiletries and cosmetics.

• Expenses for trips or programs for general health improvement

• Amounts paid for nicotine gum and nicotine patches that don’t require a prescription

ARE HEALTH INSURANCE PREMIUMS TAX-DEDUCTIBLE?

Yes, in some situations insurance premiums for policies that cover medical care or qualified long-term care can be deducted, including premiums for policies purchased by self-employed individuals for themselves, their spouses and dependents.

Fore example, medicare premiums are tax-deductible as follows:

• Medicare A premiums (usually free for individuals covered by Social Security)
• Medicare B supplemental insurance
• Medicare D insurance
• Medicare supplemental insurance premiums

CAN I DEDUCT COMPENSATION FROM A PERSONAL INJURY LAWSUIT?

Internal Revenue Code Section 104 provides an exclusion from taxable income with respect to personal injury lawsuits, settlements and awards. However, the full compensation amount, including damages for intangible losses such as pain and suffering as well as reimbursement of tangible expenses such as medical care may not be tax-deductible. The details of each case are evaluated to determine which amounts can be written off.

If you or a loved one is injured as the result of another party’s negligence, hiring an experienced personal injury lawyer is the best way to ensure you receive the compensation you and your family deserve.

CALL OUR EXPERIENCED PERSONAL INJURY LAWYERS TO START YOUR CASE TODAY

With more than 800 years of combined legal experience, we have the skills, knowledge and resources to win your personal injury case. We have won millions of dollars for claims involving car accidents, birth injuries, slip and fall injuries, defective products, nursing home abuse and social security disability. Our highly-qualified personal injury lawyers will protect your rights and win the compensation you and your family deserve.

Personal injury law is complicated, but finding the right personal injury attorney is simple.

Don’t let the legal clock run out. Start your case today by clicking the link below or calling 1-800-CALL-SAM for a free, no-obligation consultation with a member of our experienced legal team.