Health Care Tax Deductions

by Gregory Hamel, studioD

Health care can cost thousands of dollars year even if you don't get sick or sustain an injury, simply due to the cost of health insurance. If you happen to need medical care, are likely to incur additional costs like deductibles, co-payments and coinsurance. The Internal Revenue Service lets you deduct medical and dental expenses, but only if those expenses exceed a minimum level based on your annual income.

Health Care Deduction Basics

You can deduct medical and dental expenses that exceed 7.5 percent of your adjusted gross income for the 2012 tax year. For instance, if you have an adjusted gross income of $100,000 and you incur $8,000 of medical expenses, you can take a $500 deduction. The income limit for the deduction is set to increase to 10 percent for tax years after 2012. The medical and dental expense deduction is an itemized deduction; when you file your income tax return you have to choose whether to use the sum of your itemized deductions or a standard deduction granted by the government. The standard deduction is $5,950 for single taxpayers on 2012 tax returns.

Qualifying Individuals

The deduction for health care expenses applies to costs you incur for you own care, your spouse's care and the care of your dependents. You can include your spouse's health care costs as long as you were married when your spouse received the care or when you paid for the care. A dependent is an individual who lives with you and depends on you for financial support. An adult relative like an elderly parent can quality as a dependent if she has a gross income under $3,800 and depends on you for at least half her support.

Qualifying Expenses

The medical and dental expenses deduction includes a wide range of common health care expenses, but it does not include all health-related expenses. Deductible expenses include the cost of insurance premiums, prescription medication, nursing homes, physical exams, surgery and ambulance costs. According to the Internal Revenue Service, costs related to babysitting, funeral expenses, health club dues and veterinary fees are nondeductible expenses. The cost of cosmetic surgery is not deductible unless the surgery is necessary to improve a deformity related to an injury, disfiguring disease or congenital abnormality.

Self-Employed Workers

If you are self-employed, you may be able to deduct a portion of your health care expenses without being subject to the 7.5 percent income limitation that applies to other taxpayers. To qualify for the deduction, you must not have access to a health insurance plan through an employer or your spouse's employer. The deduction cannot exceed your total self-employment income, so you aren't eligible if your business took a loss for the year.

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About the Author

Gregory Hamel has been a writer since September 2008 and has also authored three novels. He has a Bachelor of Arts in economics from St. Olaf College. Hamel maintains a blog focused on massive open online courses and computer programming.

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