Can Counseling Be Deducted as a Medical Expense?

Getting counseling as prescribed for a mental health or behavioral issue can be just as important as being treated for physical ailments. Like many types of health care, counseling and other mental health treatment that meet certain requirements can be deducted as a medical expense from your income tax.

How to Make Therapy Tax Deductible

In the IRS Publication 502, which defines which medical expenses are eligible for deduction on a personal income tax return, medical care expenses are defined as expenses that alleviate or prevent a physical or mental illness or disability. These expenses may include services rendered by medical professionals, the cost of medical supplies and hospitalization costs. Your deduction may include the cost of counseling that you pay for yourself, your spouse or your dependents.

The IRS allows you to deduct medical expenses associated with psychiatric care, including psychoanalysis. You also can deduct expenses related to treatment by a psychologist. Some of the mental health and counseling services that are deductible include alcoholism and drug addiction treatment and smoking cessation programs.

In addition to deducting amounts paid to medical providers and health care facilities, you can deduct transportation costs related to treatment. This includes fares for public transit, taxi or the cost of ambulance service if required. If you use your personal car, you can deduct the operating costs such as gas and oil. For 2018, the allowable car deduction is 18 cents per mile. When a parent or nurse is needed to accompany the person who is receiving treatment, those transportation costs may also be deductible.

Medical Expenses Exceptions

Treatment that doesn’t alleviate or prevent a specific condition, but is instead aimed at your general mental health, is not eligible. Of course, any treatment paid by your insurance cannot be claimed, but you can claim the deductibles you paid, provided they meet the requirements.

2018 Taxes and the 7.5 Percent Threshold

Although you can still claim physiotherapy on tax, as well as mental health and other expenses, you'll only be able to claim expenses in excess of 7.5 percent of your income this year. In 2019, the threshold goes back up to 10 percent, which means the amount you pay this year will need to exceed 10 percent of your income in order for you to be able to able to claim it. If you use a software preparation tool like Turbotax medical expenses will be calculated for you to determine if they qualify.

Medical Expenses for 2017 Taxes

When you file Schedule A, Form 1040 with your federal income taxes, you can deduct medical and dental expenses in excess of 7.5 percent of your adjusted gross income. For example, if you had an adjusted gross income of $50,000 and had eligible medical expenses of $6,000, you are allowed to deduct $2,250, which is the remainder when 7.5 percent of $50,000, or $3750, is subtracted from $6,000. This is a new threshold for 2017 and 2018, adjusted down from its previous value of 10 percent by the Tax Reform Act of 2017.