Medical Expense Deductions

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Ralph: Have you ever wondered if that expensive prescription or medical procedure can be written off on your taxes?

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Well, today we're separating medical myth from fact.

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And we're going to share what expenses the IRS actually allows you to deduct.

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You don't want to miss this one.

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Welcome back to the show.

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on this, personal finance Friday.

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I'm excited to dive in today's topic with you.

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It's fertilizer season here in Delaware, and we use it all for fertilizer and I mean all in this state, and since we have a huge chicken raising business, You can only imagine where all that waste goes.

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Needless to say, it's a pungent morning here on the farm.

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So I thought I'd start off with that.

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On today's show, we're tackling a topic that impacts all of our lives and that's medical expenses.

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You know, as I get older, I see this as being more and more of an issue.

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And I want to start by thanking a longtime client for asking about today's topic.

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She also wanted to remind our listeners.

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About the annual IRS publication , number 502.

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That's where they highlight what's new each year in the tax code.

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It's really a great resource.

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And again, I want to thank this client for pointing that out to us and asking today's question.

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So at some point or another, we're all going to incur medical costs.

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Whether it's for routine checkups.

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Unexpected illnesses or injuries or planned medical procedures.

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We're all going to face that.

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And when these bills start rolling in, wouldn't it be nice to know some of those expensive costs can be deducted on your tax return.

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Well today, we're going to explore just that.

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We're going to talk about which medical expenses the IRS actually allows you to write off and which ones you won't be able to do it.

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And you know which ones don't make the cut.

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As you'll see the rules can be quite complex.

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So listen up as we separate medical myth from fact.

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My goal today is by the end of today's episode, you'll have the clarity on what medical receipts to set aside for tax time.

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Now, before we dive in, don't forget to subscribe to the show and join our email list.

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You can do that at askralphpodcast.com because you don't want to miss tomorrow show tomorrow.

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We're going to talk about reverse mortgages and just what they are.

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The potential pros and cons of those.

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So it has an episode you don't want to miss.

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Well, let's start with the basics today.

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The IRS allows you to deduct legitimate medical care expenses for yourself.

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For your spouse and your dependent.

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Now here's the key folks.

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These expenses must meet three key IRS criteria.

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Now, what are they?

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Well, we're going to talk about that right now.

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They must be primarily to alleviate or prevent a physical or mental defect or illness.

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I guess I'm in trouble already.

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Anyway, just being funny.

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This includes dental and vision expenses.

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So they must be primarily to alleviate or prevent a physical or mental defect or illness.

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And like I said, this includes dental and vision expenses, as well as, you know, routine medical.

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They can't be for general health purposes, for example.

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And this is one of the questions my client was asking directly.

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Vitamin supplements or gym memberships don't count.

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The care must be targeting a specific medical condition.

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So overall general health.

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Isn't going to work for this.

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There are also some limitations depending upon your age.

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And they expand as must exceed seven and a half percent of your adjusted gross income.

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If your medical bills, don't meet this threshold.

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You unfortunately can't take the deduction.

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So now we've covered the core criteria.

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Let's dive into some common examples of deductible and unfortunately non-deductible healthcare costs.

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Let's start with a deductible ones.

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Doctor visits, copays and prescription medication used to treat an existing medical condition.

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are deductible.

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So you want to make sure you keep track of those copays.

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You want to keep track of those RX receipts, keep track of all that stuff.

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Another thing that is deductible is necessary equipment that will be things that crutches wheelchairs.

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and, insulin monitors.

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I happen to be a type two diabetic, so my insulin supplies are covered.

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As long as they're prescribed by a medical professional, these things can be deducted.

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In addition to that.

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And this is something a lot of my clients aren't aware of.

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Transportation for medical care, such as ambulance fees or mileage to drive to medical appointments count as well.

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So you want to keep a mileage log, especially as you get older.

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Keep track of all those doctor visits.

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If you're going to see a specialist, I have some clients that have told me.

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They have to go out of state or to another area to see a particular specialist, all that travel cost, all that mileage is deductible.

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In addition to that medical procedures like surgeries.

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Dental work like crowns or braces or vision correction surgery, all qualify as a medical deduction.

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In addition to that chiropractic care and acupuncture have also been rolled as deductible.

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If they're treating a diagnosed medical issue.

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And here's what a lot of people aren't aware of.

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Special schooling for physically or mentally disabled children can potentially be deducted as well.

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So now we've covered the things that are deductible.

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Let's explore some expenses that you might think are deductible.

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Actually won't pass the IRS test.

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So here are some nondeductible things, gym memberships.

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We talked about this a little bit.

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They're not deductible.

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Even if your doctor recommends exercise for a health condition.

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And even if you go and see your doctor for your annual physical, I think I got mine coming up pretty soon.

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For my general wellbeing, the doctor could recommend exercise now in my particular case.

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Since I am a type two diabetic.

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This exercise probably would qualify as a medical deduction.

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I don't want to confuse everybody, but in general, The gym is not deductible as an expense.

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Similarly, as we talked about Vitamins and supplements taken for overall health.

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Don't qualify and that's a big disappoint for a lot of people.

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I think I kind of disagree with that, but unfortunately we had to play within the rules.

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So they must be prescribed by a doctor to treat a diagnosed condition.

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Now what you can do, and I've actually done this myself.

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If you want to, you can have your doctor prescribe vitamins and supplements, and then they would be deductible.

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Now, another thing you cannot deduct.

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Is teeth whitening.

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Which is really a big disappointment.

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I thought those crest white strips would be deductible.

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And other cosmetic dental procedures don't count because they are not medically necessary.

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that really keys in on the key things, folks.

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And that is.

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These things need to be medically necessary.

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Let's move on.

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Massage therapy is generally not deductible unless recommended by a doctor to treat a specific injury or condition again.

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You hear what I'm saying?

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Folks?

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Unless a doctor recommends it to treat a specific injury or condition.

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So if you have one of those chronic conditions, Let's say, for example, you have some sort of lower back pain sciatica as an example, that I went through a bout of that about two years ago and my doctor actually recommended massage therapy.

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So I was able to write those expenses off.

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In addition to that nonprescription drugs, like pain relievers, allergy medication, and antacids don't qualify, they must be prescribed again.

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So here's something my wife and I did.

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Sometimes we have some aches and pains as we get older.

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So one of the things we did was he had our doctor write us a prescription for Neproxin.

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Now I'm not a physician, I'm not giving you any medical advice, but because it went through the doctor's office.

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And came in as a prescription.

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Those things are deductible.

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Okay.

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What else?

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Isn't deductible weight loss programs are not deductible.

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Even if you have a diagnosed condition like obesity or diabetes in general.

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Health improvements are not deductible by the IRS.

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So as you can see.

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The key is proving the expense is to treat a specific diagnosed medical issue And not for general health and wellbeing.

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When in doubt and I can't stress this enough, get a note from your doctor to justify the expense.

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Now let's talk about some actionable steps.

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So when it comes to tax time, you need to follow these steps to maximize your medical expense deductions.

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And I can't stress this enough.

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I say this to clients every day in my practice.

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Comb through your years, medical receipts and bills to identify expenses that meet the IRS criteria we discussed today.

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Set those aside in a designated folder or box, I have some clients that actually use a specific credit card or debit card.

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To keep track of all their medical expenses.

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Listen, folks, the truth is this.

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As our population ages, a lot of my clients tend to be a little bit older.

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That is the main area of their expenses.

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So it's something they really key in on.

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The next step, calculate the total of these qualified expenses and only claim the ones that exceed your adjusted gross income percentage.

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And that's where you're going to enlist somebody like myself to help you navigate that.

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And here's another.

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Ultimate thing you need to do.

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And you need to get supporting documentation from your healthcare providers.

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If you think an expense might raise IRS scrutiny.

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You want to keep prescription info?

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Treatment plans and doctor's notes.

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I'll give you a great example of this.

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My mother-in-law unfortunately is suffering from dementia.

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So last year, the doctor recommended she go into full time.

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assisted living.

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So those assisted living expenses because they are prescribed by the doctor because my mother-in-law is unfortunately unable to care for herself.

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All of those expenses are considered valid medical expenses, but like I told my wife and my sister-in-law.

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The key is going to be keep track of all of those things.

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So every month when you make those payments and they're not cheap folks, If you have anybody that's involved in long-term care or assisted living, those things can get expensive.

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So keep track of all those expenses, because in this particular situation, because of the costs, my mother-in-law generally has no taxable income because she's able to write off all of her expenses against that income.

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Now if you claim medical mileage.

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For drives to appointment, you've got to keep it up.

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Mileage log for that, keep a careful log with date, mileage, and the medical purposes.

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And then you need to make sure these expenses are for you.

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As we talked about there for you, your spouse or a legal dependent.

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And then what you want to do is make sure you submit those sorta medical expenses with your tax return forms.

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And that's where I'm going to say this, consider having a tax professional like myself, double-check your work, or actually prepare your tax return.

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The key is to stay organized with this medical paperwork?

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And stay educated on IRS rules.

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That's why I love this particular client.

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She's been a client for many years.

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She studies the tax code she still comes in and has me do her tax returns.

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Well, let me tell you.

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She asked some of the best questions of any of my clients.

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And she reads that publication that we talked about.

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She understands the things that are changing.

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You don't have to be a rocket scientist to do it, but you have to be informed.

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That's the key.

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The key to maximizing these deductions and saving hundreds, even thousands of dollars each year is to be informed.

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So before we wrap up, I want to remind all of our listeners to visit our podcast page.

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That's at askralphpodcast.com.

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There I'm going to encourage you to join our email list.

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Well, Ralph, why do you want to do that?

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Well, I'm gonna tell you why right now, every week, and this is amazing guys.

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We're giving away a $25 Amazon gift card.

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So we're going to go through every week.

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We're going to pick somebody at random.

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Who's a member of our distribution list and going to send them a $25 Amazon gift card.

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Well guess what?

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If you're not on the list, you can't win now.

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Why do you want to be on the list?

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Well, you want to be on the list because we're sending out information about our episodes.

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News things like that.

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So don't forget to join up there on our website.

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And it also, if you want to schedule a consultation with me, you can do that right there.

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for example, let's say you've got some questions about your tax return.

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Or you've got some general questions about your finances.

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You can go right to our website.

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That's at askralphpodcast.com/store.

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And you can actually schedule a one-on-one meeting with me.

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It doesn't matter where in the world you're located.

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You know, the zoom platform has opened up this for.

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People to meet with me all over the world.

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And I meet with clients all over the world, and it's really cool to meet people from different cultures and different parts of the country.

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So to recap.

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Let's talk about what we've explored today.

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We've discussed how you can deduct legitimate medical expenses for yourself, your spouse and dependents.

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Those that exceed, you know, that threshold, but not all medical costs.

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Qualify.

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They must target a specific diagnosed condition, not general health.

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And we separate medical myth from fact.

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By listing expenses that are commonly thought to be deductible, but won't pass IRS scrutiny.

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Those things like gym memberships, vitamins, weight loss programs, and cosmetic procedures.

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Oh, and I forgot to mention.

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I met with a client yesterday.

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And he asked me, Ralph, listen, I have a medical marijuana card.

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Can I deduct the cost of those marijuana purchases?

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And unfortunately I checked this again this morning, before I set up to do this recording.

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The IRS will not allow you to deduct.

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Medical marijuana, because it's still considered illegal at the federal level.

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Now some states will allow you to deduct that.

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I'm not sure how you're going to do that.

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If the states use the standard schedule, a not to get tax wonky with you.

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But that's going to be an interesting thing.

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So I'm going to have to do some more research into that.

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Maybe we'll do another episode about that medical, marijuana and cannabis.

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So not to get off topic here, but I just remembered that.

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So on the flip side cost like prescription medications, Treatments for diagnosed illnesses and medical transportation are deductibles.

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You want to make sure you're keeping track of that.

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So hopefully now you have some clarity.

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On what medical receipts to organize for tax time.

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Remember?

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Keep thorough records and run unclear expenses by somebody like myself.

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And a little diligence can save you big on your tax bill.

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Again, I want to remind you to visit our website at askralphpodcast.com.

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There's all kinds of episodes out there that you get absolutely free.

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Listen folks.

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This is my mission.

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I want to educate people.

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I want to help people.

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And if I can provide you with information to help you be successful financially.

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Or if I can find ways to save you money on your taxes, like in these medical things, then I feel like I've done my job.

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So thanks again for joining me today.

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My prayer is that you feel equipped and empowered.

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To steward your finances in a way that honors God, don't be afraid to claim deductions.

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You deserve that's your right as a us citizen.

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But of course you got to operate with integrity and as always stay financially savvy, and God bless you abundantly.