Standard
mileage rate. The
standard mileage rate allowed
for out-of-pocket expenses for a
car when you use it for medical
reasons is 14 cents a mile for
2004. See Transportation
under What Expenses Are Includible.
Health
Savings Accounts (HSAs). Beginning
in 2004, you may be able to make
tax-deductible contributions to
a health savings account to pay
qualified medical expenses.
Health savings accounts are
discussed in Publication 969,
Health Savings Accounts and
Other Tax-Favored Health Plans.
Reminders
Health
coverage tax credit. There
is a credit for health insurance
premiums paid by certain workers
who are displaced by foreign
trade or who are receiving a
pension from the Pension Benefit
Guaranty Corporation. For more
information, see
Health Coverage Tax Credit
in chapter 39.
Introduction
This chapter will help you
determine:
What medical
expenses are,
What expenses you
can include this year,
How much of the
expenses you can deduct,
Whose medical
expenses you can
include,
What medical
expenses are includible,
How you treat
reimbursements,
How to report the
deduction on your tax
return,
How to report
impairment-related work
expenses, and
How to report health
insurance costs if you
are self-employed.
Useful Items - You
may want to see:
Publications
502
Medical and Dental
Expenses
969
Health Savings Accounts
and Other Tax-Favored
Health Plans
Form
(and Instructions)
Schedule A (Form 1040)
Itemized Deductions
What Are Medical
Expenses?
Medical expenses are the
costs of diagnosis, cure,
mitigation, treatment, or
prevention of disease, and the
costs for treatments affecting
any part or function of the
body. They include the costs of
equipment, supplies, and
diagnostic devices needed for
these purposes.
Medical care expenses must be
primarily to alleviate or
prevent a physical or mental
defect or illness. Medical
expenses include dental
expenses. Do not include
expenses that are merely
beneficial to general health,
such as vitamins or a vacation.
Medical expenses include the
premiums you pay for insurance
that covers the expenses of
medical care, and the amounts
you pay for transportation to
get medical care. Medical
expenses also include amounts
paid for qualified long-term
care services and limited
amounts paid for any qualified
long-term care insurance
contract.
What Expenses Can
You Include This
Year?
You can include only the
medical and dental expenses you
paid this year, regardless of
when the services were provided.
If you pay medical expenses by
check, the day you mail or
deliver the check generally is
the date of payment. If you use
a “pay-by-phone”
or “online”
account to pay your medical
expenses, the date reported on
the statement of the financial
institution showing when payment
was made is the date of payment.
If you use a credit card,
include medical expenses you
charge to your credit card in
the year the charge is made, not
when you actually pay the amount
charged.
Separate
returns.
If you and your spouse
live in a noncommunity
property state and file
separate returns, each of
you can include only the
medical expenses each
actually paid. Any medical
expenses paid out of a joint
checking account in which
you and your spouse have the
same interest are considered
to have been paid equally by
each of you, unless you can
show otherwise.
Community property states.
If you and your spouse
live in a community property
state and file separate
returns, any medical
expenses paid out of
community funds are divided
equally. Each of you should
include half the expenses.
If medical expenses are paid
out of the separate funds of
one spouse, only the spouse
who paid the medical
expenses can include them.
If you live in a community
property state, are married,
and file a separate return,
see Publication 555,
Community Property.
How Much of the
Expenses Can You
Deduct?
You can deduct only the
amount of your medical and
dental expenses that is more
than 7.5% of your adjusted gross
income (Form 1040, line 36).
In this chapter, the term “7.5%
limit” is used to refer
to 7.5% of your adjusted gross
income. The phrase “subject
to the 7.5% limit” is
also used. This phrase means
that you must subtract 7.5%
(.075) of your adjusted gross
income from your medical
expenses to figure your medical
expense deduction.
Example.
Your adjusted gross
income is $40,000, 7.5% of
which is $3,000. You paid
medical expenses of $2,500.
You cannot deduct any of
your medical expenses
because they are not more
than 7.5% of your adjusted
gross income.
Whose Medical
Expenses Can You
Include?
You can generally include
medical expenses you pay for
yourself as well as those you
pay for someone who was your
spouse or your dependent either
when the services were provided
or when you paid for them. There
are different rules for
decedents and for individuals
who are the subject of multiple
support agreements.
Spouse.
You can include medical
expenses you paid for your
spouse. To include these
expenses, you must have been
married either at the time
your spouse received the
medical services or at the
time you paid the medical
expenses.
Example 1.
Mary received medical
treatment before she
married Bill. Bill paid
for the treatment after
they married. Bill can
include these expenses
in figuring his medical
expense deduction even
if Bill and Mary file
separate returns.
If Mary had paid the
expenses, Bill could not
include Mary's expenses
in his separate return.
Mary would include the
amounts she paid during
the year in her separate
return. If they filed a
joint return, the
medical expenses both
paid during the year
would be used to figure
their medical expense
deduction.
Example 2.
This year, John paid
medical expenses for his
wife Louise, who died
last year. John married
Belle this year and they
file a joint return.
Because John was married
to Louise when she
received the medical
services, he can include
those expenses in
figuring his medical
deduction for this year.
Dependent.
You can include medical
expenses you paid for your
dependent. For you to
include these expenses, the
person must have been your
dependent either at the time
the medical services were
provided or at the time you
paid the expenses. A person
generally qualifies as your
dependent for purposes of
the medical expense
deduction if all three of
the following requirements
are met.
That person
lived with you for
the entire year as a
member of your
household or is:
Your
child,
grandchild,
great
grandchild,
etc. (a
legally
adopted
child is
considered
your child).
Your
stepchild.
Your
brother,
sister, half
brother,
half sister,
stepbrother,
or
stepsister.
Your
parent,
grandparent,
or other
direct
ancestor,
but not
foster
parent.
Your
stepfather
or
stepmother.
A
brother or
sister of
your father
or mother.
A son or
daughter of
your brother
or sister.
Your
father-in-law,
mother-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
or
sister-in-law.
That person was
a U.S. citizen or
resident, or a
resident of Canada
or Mexico, for some
part of the calendar
year in which your
tax year began.
You provided
over half of that
person's total
support for the
calendar year.
You can include the
medical expenses of any
person who is your dependent
even if you cannot claim an
exemption for him or her on
your return.
Example.
In 2003 your son was
your dependent. In 2004
he no longer qualified
as your dependent.
However, you paid $800
in 2004 for medical
services provided to
your son in 2003 when he
was your dependent. You
can include the $800 in
your medical expenses
for 2004. You cannot
include this amount in
your 2003 medical
expenses.
Adopted
child.
You can include medical
expenses that you paid for a
child before adoption, if
the child qualified as your
dependent when the medical
services were provided or
when the expenses were paid.
If you pay back an
adoption agency or other
persons for medical expenses
they paid under an agreement
with you, you are treated as
having paid those expenses
provided you clearly
substantiate that the
payment is directly
attributable to the medical
care of the child.
But if you pay the agency
or other person for medical
care that was provided and
paid for before adoption
negotiations began, you
cannot include them as
medical expenses.
You may be able to
take a credit or exclusion
for other expenses related
to adoption. See Publication
968, Tax Benefits for
Adoption, for more
information.
Child of
divorced or separated
parents.
For purposes of the
medical and dental expenses
deduction, a child of
divorced or separated
parents can be treated as a
dependent of both parents.
Each parent can include the
medical expenses he or she
pays for the child, even if
the other parent claims the
child's dependency
exemption, if:
The child is in
the custody of one
or both parents for
more than half the
year,
The child
receives over half
of his or her
support during the
year from his or her
parents, and
The child's
parents:
Are
divorced or
legally
separated
under a
decree of
divorce or
separate
maintenance,
Are
separated
under a
written
separation
agreement,
or
Live
apart at all
times during
the last 6
months of
the year.
This does not apply if the
child's exemption is being
claimed under a multiple
support agreement.
Support
claimed under a multiple
support agreement. If
you are considered to have
provided more than half of a
person's support under a
multiple support agreement,
you can include medical
expenses you pay for that
person, even if you cannot
claim an exemption for that
person. A multiple support
agreement is used when two
or more people provide more
than half of a person's
support, but no one alone
provides more than half.
For rules regarding what
expenses you can include
this year, see
What Expenses Can You
Include This Year,
earlier.
Any medical expenses paid
by others who joined you in
the agreement cannot be
included as medical expenses
by anyone. However, you can
include the entire
unreimbursed amount you paid
for medical expenses.
Example.
You and your three
brothers each provide
one-fourth of your
mother's total support.
Under a multiple support
agreement, you treat
your mother as your
dependent. You paid all
of her medical expenses.
Your brothers repaid you
for three-fourths of
these expenses. In
figuring your medical
expense deduction, you
can include only
one-fourth of your
mother's medical
expenses. Your brothers
cannot include any part
of the expenses.
However, if you and your
brothers share the
nonmedical support items
and you separately pay
all of your mother's
medical expenses, you
can include the amount
you paid for her medical
expenses in your medical
expenses.
Decedent
Medical expenses paid
before death by the decedent
are included in figuring any
deduction for medical and
dental expenses on the
decedent's final income tax
return. This includes
expenses for the decedent's
spouse and dependents as
well as for the decedent.
The survivor or personal
representative of a decedent
can choose to treat certain
expenses paid by the
decedent's estate for the
decedent's medical care as
paid by the decedent at the
time the medical services
were provided. The expenses
must be paid within the
1-year period beginning with
the day after the date of
death. If you are the
survivor or personal
representative making this
choice, you must attach a
statement to the decedent's
Form 1040 (or the decedent's
amended return, Form 1040X)
saying that the expenses
have not been and will not
be claimed on the estate tax
return.
Qualified medical
expenses paid before death
by the decedent are not
deductible if paid with a
tax-free distribution from
any Archer MSA or health
savings account.
Amended returns and
claims for refund are
discussed in chapter 1.
What if
you pay medical expenses
of a deceased spouse or
dependent?
If you paid medical
expenses for your
deceased spouse or
dependent, include them
as medical expenses on
your Form 1040 in the
year paid, whether they
are paid before or after
the decedent's death.
The expenses can be
included if the person
was your spouse or
dependent either at the
time the medical
services were provided
or at the time you paid
the expenses.
What Medical
Expenses Are
Includible?
Use Table 23-1 in this
chapter as a guide to determine
which medical and dental
expenses you can include on
Schedule A (Form 1040). See
Publication 502 for information
about other expenses you can
include.
Table
23-1. Medical and Dental
Expenses Checklist
You can
include:
You cannot
include:
Bandages
Birth
control
pills
prescribed
by your
doctor
Capital
expenses
for
equipment
or
improvements
to your
home
needed
for
medical
care
(see
Publication
502)
Certain
fertility
enhancement
procedures
(see
Publication
502)
Certain
weight-loss
expenses
for
obesity
Diagnostic
devices
Expenses
of an
organ
donor
Eye
surgery—to
promote
the
correct
function
of the
eye
Guide
dogs or
other
animals
aiding
the
blind,
deaf,
and
disabled
Special
education
for
mentally
or
physically
disabled
persons
(see
Publication
502)
Stop-smoking
programs
Transportation
for
needed
medical
care
Treatment
at a
drug or
alcohol
center
(includes
meals
and
lodging
provided
by the
center)
Wages
for
nursing
services
(see
Publication
502)
Baby
sitting
and
childcare
Bottled
water
Contributions
to
Archer
MSAs
(see
Publication
969)
Diaper
service
Expenses
for your
general
health
(even if
following
your
doctor's
advice)
such as—
—Health
club
dues
—Household
help
(even if
recommended
by a
doctor)
—Social
activities,
such as
dancing
or
swimming
lessons
—Trip
for
general
health
improvement
Flexible
spending
account
reimbursements
for
medical
expenses
(if
contributions
were on
a
pre-tax
basis)
(see
Publication
502)
Funeral,
burial,
or
cremation
expenses
Health
savings
account
payments
for
medical
expenses
(see
Publication
502)
Illegal
operation
or
treatment
Life
insurance
or
income
protection
policies,
or
policies
providing
payment
for loss
of life,
limb,
sight,
etc.
Maternity
clothes
Medical
insurance
included
in a car
insurance
policy
covering
all
persons
injured
in or by
your car
Medicine
you buy
without
a
prescription
Nursing
care for
a
healthy
baby
Prescription
drugs
you
brought
in (or
ordered
shipped)
from
another
country,
in most
cases
(see
Publication
502)
Nutritional
supplements,
vitamins,
herbal
supplements,
“natural
medicines,”
etc.,
unless
recommended
by a
medical
practitioner
as a
treatment
for a
specific
medical
condition
diagnosed
by a
physician
Surgery
for
purely
cosmetic
reasons
(see
Publication
502)
Toothpaste,
toiletries,
cosmetics,
etc.
Teeth
whitening
Weight-loss
expenses
not for
the
treatment
of
obesity
or other
disease
Insurance
Premiums
You can include in
medical expenses insurance
premiums you pay for
policies that cover medical
care. Policies can provide
payment for:
Hospitalization,
surgical fees,
X-rays, etc.,
Prescription
drugs,
Replacement of
lost or damaged
contact lenses,
Membership in an
association that
gives cooperative or
so-called “free-choice”
medical service, or
group
hospitalization and
clinical care, or
Qualified
long-term care
insurance contracts
(subject to
additional
limitations). See
Qualified
Long-term Care
Insurance Contracts
in Publication 502.
If you have a policy that
provides more than one kind
of payment, you can include
the premiums for the medical
care part of the policy if
the charge for the medical
part is reasonable. The cost
of the medical part must be
separately stated in the
insurance contract or given
to you in a separate
statement.
Note.
When figuring the
amount of insurance
premiums you can deduct
on Schedule A, do not
include any health
coverage tax credit
advance payments shown
in box 1 of Form 1099-H.
Also, if you are
claiming the health
coverage tax credit,
subtract the amount
shown on line 4 of Form
8885 (reduced by any
advance payments shown
on line 6 of that form)
from the total insurance
premiums you paid.
Employer-sponsored
health insurance plan.
Do not include in your
medical and dental
expenses on Schedule A
(Form 1040) any
insurance premiums paid
by an employer-sponsored
health insurance plan
unless the premiums are
included in box 1 of
your Form W-2. Also, do
not include on Schedule
A (Form 1040) any other
medical and dental
expenses paid by the
plan unless the amount
paid is included in box
1 of your Form W-2.
Example.
You are a federal
employee participating
in the Federal Employee
Health Benefits (FEHB)
program. Your share of
the FEHB premium is paid
with pre-tax dollars.
Because you are an
employee whose insurance
premiums are paid with
money that is never
included in your gross
income, you cannot
deduct the premiums paid
with that money.
Long-term care services.
Contributions made by
your employer to provide
coverage for qualified
long-term care services
under a flexible
spending or similar
arrangement must be
included in your income.
This amount will be
reported as wages in box
1 of your Form W-2.
Health reimbursement
arrangement (HRA).
If you have medical
expenses that are
reimbursed by a health
reimbursement
arrangement, you cannot
include those expenses
in your medical
expenses. This is
because an HRA is funded
solely by the employer.
Medicare A.
If you are covered
under social security
(or if you are a
government employee who
paid Medicare tax), you
are enrolled in Medicare
A. The payroll tax paid
for Medicare A is not a
medical expense. If you
are not covered under
social security (or were
not a government
employee who paid
Medicare tax), you can
voluntarily enroll in
Medicare A. In this
situation you can
include the premiums
paid for Medicare A as a
medical expense.
Medicare B.
Medicare B is a
supplemental medical
insurance. Premiums you
pay for Medicare B are a
medical expense. If you
applied for it at age 65
or after you became
disabled, you can
include in medical
expenses the monthly
premiums you paid. If
you were over age 65 or
disabled when you first
enrolled, check the
information you received
from the Social Security
Administration to find
out your premium.
Prepaid
insurance premiums.
Premiums you pay
before you are age 65
for insurance for
medical care for
yourself, your spouse,
or your dependents after
you reach age 65 are
medical care expenses in
the year paid if they
are:
Payable in
equal yearly
installments, or
more often, and
Payable for
at least 10
years, or until
you reach age 65
(but not for
less than 5
years).
Unused
sick leave used to pay
premiums.
You must include in
gross income cash
payments you receive at
the time of retirement
for unused sick leave.
You also must include in
gross income the value
of unused sick leave
that, at your option,
your employer applies to
the cost of your
continuing participation
in your employer's
health plan after you
retire. You can include
this cost of continuing
participation in the
health plan as a medical
expense.
If you participate in
a health plan where your
employer automatically
applies the value of
unused sick leave to the
cost of your continuing
participation in the
health plan (and you do
not have the option to
receive cash), do not
include the value of the
unused sick leave in
gross income. You cannot
include this cost of
continuing participation
in that health plan as a
medical expense.
Meals and
Lodging
You can include in
medical expenses the cost of
meals and lodging at a
hospital or similar
institution if a principal
reason for being there is to
get medical care. See
Nursing home,
later.
You may be able to
include in medical expenses
the cost of lodging not
provided in a hospital or
similar institution. You can
include the cost of such
lodging while away from home
if all of the following
requirements are met.
The lodging is
primarily for and
essential to medical
care.
The medical care
is provided by a
doctor in a licensed
hospital or in a
medical care
facility related to,
or the equivalent
of, a licensed
hospital.
The lodging is
not lavish or
extravagant under
the circumstances.
There is no
significant element
of personal
pleasure,
recreation, or
vacation in the
travel away from
home.
The amount you include in
medical expenses for lodging
cannot be more than $50 for
each night for each person.
You can include lodging for
a person traveling with the
person receiving the medical
care. For example, if a
parent is traveling with a
sick child, up to $100 per
night can be included as a
medical expense for lodging.
Meals are not included.
Nursing
home.
You can include in
medical expenses the
cost of medical care in
a nursing home, home for
the aged, or similar
institution, for
yourself, your spouse,
or your dependents. This
includes the cost of
meals and lodging in the
home if a principal
reason for being there
is to get medical care.
Do not include the
cost of meals and
lodging if the reason
for being in the home is
personal. You can,
however, include in
medical expenses the
part of the cost that is
for medical or nursing
care.
Transportation
You can include in
medical expenses amounts
paid for transportation
primarily for, and essential
to, medical care.
You can
include:
Bus, taxi,
train, or plane
fares, or
ambulance
service,
Transportation
expenses of a
parent who must
go with a child
who needs
medical care,
Transportation
expenses of a
nurse or other
person who can
give injections,
medications, or
other treatment
required by a
patient who is
traveling to get
medical care and
is unable to
travel alone,
and
Transportation
expenses for
regular visits
to see a
mentally ill
dependent, if
these visits are
recommended as a
part of
treatment.
Car
expenses.
You can include
out-of-pocket expenses,
such as the cost of gas
and oil, when you use
your car for medical
reasons. You cannot
include depreciation,
insurance, general
repair, or maintenance
expenses.
If you do not want
to use your actual
expenses, for 2004 you
can use a standard rate
of 14 cents a mile for
use of a car for medical
reasons.
You can also include
parking fees and tolls.
You can add these fees
and tolls to your
medical expenses whether
you use actual expenses
or use the standard
mileage rate.
Example.
Bill Jones drove
2,800 miles for
medical reasons
during the year. He
spent $200 for gas,
$5 for oil, and $50
for tolls and
parking. He wants to
figure the amount he
can include in
medical expenses
both ways to see
which gives him the
greater deduction.
He figures the
actual expenses
first. He adds the
$200 for gas, the $5
for oil, and the $50
for tolls and
parking for a total
of $255.
He then figures
the standard mileage
amount. He
multiplies the 2,800
miles by 14 cents a
mile for a total of
$392. He then adds
the $50 tolls and
parking for a total
of $442.
Bill includes the
$442 of car expenses
with his other
medical expenses for
the year because the
$442 is more than
the $255 he figured
using actual
expenses.
Transportation expenses
you cannot include.
You cannot include in
medical expenses the
cost of transportation
expenses in the
following situations.
Going to and
from work, even
if your
condition
requires an
unusual means of
transportation.
Travel for
purely personal
reasons to
another city for
an operation or
other medical
care.
Travel that
is merely for
the general
improvement of
one's health.
Disabled
Dependent Care
Expenses
Some disabled dependent
care expenses may qualify as
either:
Medical expenses
or
Work-related
expenses for
purposes of taking a
credit for dependent
care. (See chapter
34.)
You can choose to apply
them either way as long as
you do not use the same
expenses to claim both a
credit and a medical expense
deduction.
How Do You Treat
Reimbursements?
You can include in medical
expenses only those amounts paid
during the taxable year for
which you received no insurance
or other reimbursement.
Insurance
Reimbursement
You must reduce your
total medical expenses for
the year by all
reimbursements for medical
expenses that you receive
from insurance or other
sources during the year.
This includes payments from
Medicare.
Even if a policy provides
reimbursement for only
certain specific medical
expenses, you must use
amounts you receive from
that policy to reduce your
total medical expenses,
including those it does not
provide reimbursement for.
Example.
You have insurance
policies which cover
your hospital and
doctors' bills but not
your nursing bills. The
insurance you receive
for the hospital and
doctors' bills is more
than their charges. In
figuring your medical
deduction, you must
reduce the total amount
you spent for medical
care by the total amount
of insurance you
received even if the
policies do not cover
some of your medical
expenses.
Health
reimbursement
arrangement (HRA).
A health reimbursement
arrangement is an
employer-funded plan
that reimburses
employees for medical
care expenses and allows
unused amounts to be
carried forward. An HRA
is funded solely by the
employer and the
reimbursements for
medical expenses, up to
a maximum dollar amount
for a coverage period,
are not included in your
income.
Other
reimbursements.
Generally, you do not
reduce medical expenses
by payments you receive
for:
Permanent
loss or loss of
use of a member
or function of
the body (loss
of limb, sight,
hearing, etc.)
or disfigurement
to the extent
the payment is
based on the
nature of the
injury without
regard to the
amount of time
lost from work,
or
Loss of
earnings.
You must, however,
reduce your medical
expenses by any part of
these payments that is
designated for medical
costs. See
How Do You Figure
and Report the Deduction
on Your Tax Return,
later.
For how to treat
damages received for
personal injury or
sickness, see
Damages For Personal
Injuries,
later.
You do not have a medical
deduction if you are
reimbursed for all of your
medical expenses for the
year.
Excess
reimbursement.
If you are reimbursed
more than your medical
expenses, you may have
to include the excess in
income. You may want to
use Figure 23-A to help
you decide if any of
your reimbursement is
taxable.
Premiums paid by you.
If you pay the entire
premium for your medical
insurance or all of the
costs of a plan similar
to medical insurance,
you generally do not
include an excess
reimbursement in your
gross income.
Premiums paid by you and
your employer. If
both you and your
employer contribute to
your medical insurance
plan and your employer's
contributions are not
included in your gross
income, you must include
in your gross income the
part of your excess
reimbursement that is
from your employer's
contribution.
See Publication 502 to
figure the amount of the
excess reimbursement you
must include in gross
income.
Reimbursement in a later
year.
If you are reimbursed
in a later year for
medical expenses you
deducted in an earlier
year, you must report
the reimbursement as
income up to the amount
you previously deducted
as medical expenses.
However, do not report
as income the
reimbursement you
received up to the
amount of your medical
deductions that did not
reduce your tax for the
earlier year. For more
information about the
recovery of an amount
that you claimed as an
itemized deduction in an
earlier year, see
Itemized Deduction
Recoveries
in chapter 13.
Figure 23-A.
Excess
Medical
Reimbursement
Algorithm
Medical
expenses not deducted.
If you did not deduct
a medical expense in the
year you paid it because
your medical expenses
were not more than 7.5%
of your adjusted gross
income, or because you
did not itemize
deductions, do not
include the
reimbursement up to the
amount of the expense in
income. However, if the
reimbursement is more
than the expense, see
Excess
reimbursement, earlier.
Example.
Last year, you
had medical expenses
of $500. You cannot
deduct the $500
because it is less
than 7.5% of your
adjusted gross
income. If, in a
later year, you are
reimbursed for any
of the $500 in
medical expenses,
you do not include
that amount in your
gross income.
Damages for Personal
Injuries
If you receive an amount in
settlement of a personal injury
suit, part of that award may be
for medical expenses that you
deducted in an earlier year. If
it is, you must include that
part in your income in the year
you receive it to the extent it
reduced your taxable income in
the earlier year. See
Reimbursement in a Later Year,
discussed earlier.
Future
medical expenses.
If you receive an amount
in settlement of a damage
suit for personal injuries,
part of that award may be
for future medical expenses.
If it is, you must reduce
any future medical expenses
for these injuries until the
amount you received has been
completely used.
How Do You Figure
and Report the
Deduction on Your
Tax Return?
Once you have determined
which medical care expenses you
can include, you figure and
report the deduction on your tax
return.
What Tax
Form Do You Use?
You figure your medical
expense deduction on lines
1–4 of Schedule A, Form
1040. You cannot claim
medical expenses on Form
1040A or Form 1040EZ. If you
need more information on
itemized deductions or you
are not sure if you can
itemize, see chapters 22 and
31.
Enter the amount you paid
for medical and dental
expenses on line 1, Schedule
A (Form 1040). This should
be your expenses that were
not reimbursed by insurance
or any other sources.
You can deduct only the
amount of your medical and
dental expenses that is more
than 7.5% of your adjusted
gross income shown on line
36, Form 1040. For an
example, see the partial
Schedule A.
Impairment-Related
Work Expenses
(Business or
Medical)
If you are disabled, you can
take a business deduction for
expenses that are necessary for
you to be able to work. If you
take a business deduction for
these impairment-related work
expenses, they are not subject
to the 7.5% limit that applies
to medical expenses.
You are disabled if you have:
A physical or mental
disability (for example,
blindness or deafness)
that functionally limits
your being employed, or
A physical or mental
impairment (for example,
a sight or hearing
impairment) that
substantially limits one
or more of your major
life activities, such as
performing manual tasks,
walking, speaking,
breathing, learning, or
working.
Impairment-related expenses
defined.
Impairment-related
expenses are those ordinary
and necessary business
expenses that are:
Necessary for
you to do your work
satisfactorily,
For goods and
services not
required or used,
other than
incidentally, in
your personal
activities, and
Not specifically
covered under other
income tax laws.
Where to
report. If you are
self-employed, deduct the
business expenses on the
appropriate form (Schedule
C, C-EZ, E, or F) used to
report your business income
and expenses.
If you are an employee,
complete Form 2106, Employee
Business Expenses, or Form
2106-EZ, Unreimbursed
Employee Business Expenses.
Enter on line 27, Schedule A
(Form 1040) that part of the
amount on line 10 of Form
2106, or line 6 of Form
2106-EZ, that is related to
your impairment. Enter the
amount that is unrelated to
your impairment on line 20,
Schedule A (Form 1040). Your
impairment-related work
expenses are not subject to
the
2%-of-adjusted-gross-income
limit that applies to other
employee business expenses.
Example.
You are blind. You must
use a reader to do your
work. You use the reader
both during your regular
working hours at your place
of work and outside your
regular working hours away
from your place of work. The
reader's services are only
for your work. You can
deduct your expenses for the
reader as business expenses.
Health Insurance
Costs for
Self-Employed
Persons
If you were self-employed and
had a net profit for the year,
were a general partner (or a
limited partner receiving
guaranteed payments), or
received wages from an S
corporation in which you were a
more than 2% shareholder (who is
treated as a partner), you may
be able to deduct, as an
adjustment to income, up to 100%
of the amount paid for medical
and qualified long-term care
insurance on behalf of yourself,
your spouse, and dependents.
The insurance plan must be
established under your trade or
business, and you cannot take
this deduction to the extent
that the amount of the deduction
is more than your earned income
from that trade or business.
You cannot take this
deduction for any month in which
you were eligible to participate
in any subsidized health plan
maintained by your employer or
your spouse's employer. This
rule is applied separately to
plans that provide long-term
care insurance and plans that do
not provide long-term care
insurance.
If you qualify to take the
deduction, use the Self-Employed
Health Insurance Deduction
Worksheet in the Form 1040
instructions to figure the
amount you can deduct. But, if
any of the following applies, do
not use the worksheet.
You had more than
one source of income
subject to
self-employment tax.
You file Form 2555,
Foreign Earned Income,
or Form 2555-EZ, Foreign
Earned Income Exclusion.
You are using
amounts paid for
qualified long-term care
insurance to figure the
deduction.
If you cannot use the
worksheet in the Form 1040
instructions, use the worksheet
in Publication 535, Business
Expenses, to figure your
deduction.
Note.
When figuring the amount
you may deduct for insurance
premiums, do not include any
advance payments shown in
box 1 of Form 1099-H, Health
Coverage Tax Credit (HCTC)
Advance Payments. Also, if
you are claiming the health
coverage tax credit,
subtract the amount shown on
line 4 of Form 8885 (reduced
by any advance payments
shown on line 6 of that
form) from the total
insurance premiums you paid.
Where to
report.You take this deduction
on Form 1040, line 31. If
you itemize your deductions
and do not claim 100% of
your self-employed health
insurance on line 31,
include any remaining
premiums with all other
medical care expenses on
Schedule A (Form 1040),
subject to the 7.5% limit.
See chapter 7 of Publication
535, Business Expenses, for
more information.
){kind=link}