Can Copayments on Medicine Be an Income Tax Deduction?

by Mark Kennan

    Copayments on certain medications will count as qualifying medical expenses that you can deduct on your taxes, assuming you're not reimbursed for them later. However, to be able to claim a deduction, you're likely going to need to have other medical expenses besides copays on medicine because of the adjusted gross income threshold.

    Prescription Usually Required

    To be deductible as a medical expense, the medicine must usually be prescribed by a doctor. For example, if you make a copay when your doctor prescribes ibuprofen, you can include those costs. However, if you don't have a prescription and get an over-the-counter medication, you can't include that cost. The only medication copay you can deduct without a prescription is insulin.

    Foreign Drugs

    Generally, you can't include the copay on any drug you purchased in a foreign country and consumed in the United States, whether you buy it in the foreign country and bring it in yourself or whether it is shipped to you from a foreign country. If you buy and consume the medication in a foreign country, such as if you get sick on vacation, you can include those copays if the medication is legal in both the foreign country and the U.S.

    Family Medical Costs

    You can include copays for yourself, your spouse and people who are your dependents either at the time you pay for the medicine or at the time the medicine is taken. For example, if you pay for your dependent daughter's prescription in December of one year, and you claim her as a dependent in that year but not the next, you can include the copay as part of the deduction even if she doesn't start taking the medicine until January of the next year. You can also include the costs for prescriptions you buy for someone who would have been your dependent except that his gross income exceeded the limit for claiming him, he filed a joint return, or you or your spouse could be claimed as a dependent on another person's return.

    AGI Limitations

    You can deduct only the portion of your medical costs, including deductible copays on medicine purchases, that exceeds a specified percentage of your adjusted gross income. In 2012, the threshold was 7.5 percent, but in 2013 it was skated ti increased to 10 percent. For example, if in 2013 your adjusted gross income were to equal $76,000, the first $7,600 of your medical expenses wouldn't be deductible.

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    About the Author

    Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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