Tax Deductions for an Illness
When hospital costs are combined with medication and rehabilitation expenses, the financial burden of an illness can quickly become overwhelming. Under Internal Revenue Service regulations, you can deduct a portion of the qualifying expenses on your federal income tax return. The idea behind the deductions is to give taxpayers some relief from the unusually large medical expenses that can accompany an illness. You must keep all bills and receipts documenting the expenses to calculate the maximum deduction on your tax return.
Medical Deduction Regulations
You can deduct medical expenses due to illness for any family member listed as a dependent on your tax return. It is important to do this in order to meet the IRS threshold amount. Under IRS regulations, you can only deduct your medical expenses when they exceed 7.5 percent of your adjusted gross income as calculated on your income tax return. This percentage increases to 10 percent in 2013. For example, if your AGI is $50,000, multiply that amount by 7.5 percent to get $3,750. You can only deduct the medical expenses that exceed $3,750. You must itemized your expenses on Schedule A for Form 1040, rather than claiming the standard deduction.
Health Care Facility Expenses
The deductions for hospital expenses stemming from an illness include more than just the hospital room. They also include doctor fees, skilled nursing care, drugs and medications. Anesthesia, blood transfusions, laboratory fees, oxygen, organ transplants and diagnostic procedures including X-rays and MRIs contribute to meet the 7.5 percent threshold. Long-term care at a nursing home or a hospice for a chronic illness are also deductible.
Illness Recovery Expenses
The expenses associated with recovering from an illness are deductible. Along with prescribed medication and drugs, you can also deduct the cost of a wheelchair, crutches and artificial limbs. If the illness was respiratory, you can deduct the cost of installing an air conditioner less any increase in your home’s value. In-home nursing care, a medical bed or special mattress, oxygen and oxygen-related equipment, and medical aids such as hearing aids and glasses are also deductible if medically necessary to recover from an illness.
The IRS gives you the choice of taking the standard mileage rate or keeping receipts to document your transportation costs. You must be going to a medical facility to receive care for your or a family member’s illness. Out-of-pocket deductible costs include tolls and parking fees, bus fare and taxi fare. Train fares, plane fares and ambulance service fees are also deductible. You also can deduct the costs of transportation and lodging for the person traveling with the sick person who is receiving medical care.
Based in St. Petersburg, Fla., Karen Rogers covers the financial markets for several online publications. She received a bachelor's degree in business administration from the University of South Florida.