The Medical Tax Deduction: Medical, Dental And Vision Expenses (2024)

• Medical costs can be written off from income taxes.
• Self-employed individuals can write off their dental insurance deductible if it’s over 7.5% of AGI.
• Medical bills can only be claimed on your taxes if you itemize your personal expenses.

Deducting medical costs from your income taxes can provide financial relief, but it's essential to understand that not every expense can be written off. The Internal Revenue Code Section 213(d) is a good place to start. It states that “medical care means amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.” So basically, medical care is a pretty broad term and covers a lot. But it gives you a good starting point to figure out what medical costs can be written off on your taxes. The IRS has a big list of qualifying medical expenses eligible for a tax deduction in Publication 502. Some of them include:

• Consultation fees
• Exam fees
• Inpatient care (meals, lodging, lab fees)
• Organ transplants
• Addiction programs
• Prescription drugs
• Transport costs (to and from medical facilities, including ambulances)
• Birth control pills
• Hearing aids
• Weight loss programs (if prescribed by a medical professional)
• Long-term care services (hiring a nurse, improvements to the house)
• Fertility treatments

Remember that you can only get a tax deduction for medical expenses not covered by your insurance or reimbursed by your employer (if you also have W-2 income). You can't cash in on that deduction if they picked up the tab. Here's how you take the medical tax deduction. First, you have to itemize your personal expenses. This is different from itemizing business expenses when paying self-employment taxes. You can use a 1099 tax calculator to find business deductions. Every taxpayer has the option to pick between the standard and itemized deduction when paying income taxes. For 2024, the standard deduction is set at $13,850 for single filers and $27,700 for joint filers. You should generally only choose to itemize your expenses if you think your personal costs will exceed the standard deduction amount. Additionally, you can only deduct the part of your medical bill that exceeds 7.5% of your AGI (Adjusted Gross Income). Say your adjusted gross income for 2024 was $50,000. You could deduct medical expenses exceeding $3,750 (which is 7.5% of your AGI). So, any medical costs beyond that $3,750 mark are eligible for a tax deduction. Again, remember to check whether your medical costs qualify as a deductible expense.

Dental insurance doesn’t usually provide coverage for cosmetic procedures. It mainly covers procedures related to maintaining and improving your oral health. Dental insurance commonly operates on a three-tier structure known as 100-80-50, and it often has an annual maximum benefit, typically around $1,500. Here's how it usually breaks down:

• Preventive care (100% Coverage): This category includes services such as annual cleanings, X-rays, and the application of sealants. Dental insurance usually covers these preventive procedures in full without requiring you to pay a portion of the cost.
• Basic procedures (80% Coverage): Basic dental procedures like fillings, extractions and treatments for gum disease (periodontal treatment) are often covered at an 80% rate. This means you would be responsible for the remaining 20% of the cost.
• Major procedures (50% Coverage): More extensive treatments like crowns, bridges, inlays and dentures typically receive 50% coverage from dental insurance. You would need to cover the other half of the expense. Root canals may fall into either the basic or major category, depending on the specifics of your plan. Keep in mind that not all dental insurance plans cover all procedures, so it's essential to look at your plan and understand its coverage.

While vision insurance itself isn’t tax deductible, you can deduct vision insurance premiums from your taxes, just like health and dental insurance. But again, they can’t be paid for by an employer. You can also deduct certain unreimbursed vision expenses as itemized deductions like:

• Eye exams
• Eye surgeries (radial keratotomy, LASIK)
• Prescription eyeglasses (including contact lenses and sunglasses)
• Braille books
• Eye drops (prescription only)

If you cover any of your medical costs with funds from a flexible spending account (FSA) or a health savings account (HSA), you can't claim those expenses as deductions. This is because the money in these accounts already comes with tax benefits, so you can’t double dip.

Self-employed individuals can claim medical bills on their taxes to help them reduce taxable income and lower their overall tax liability. This is especially useful when making estimated tax payments. To take the medical tax deduction, you’ll need to itemize expenses on Schedule A. To do that, you need to total your medical costs and make sure the bill exceeds 7.5% of your AGI. You can find your AGI by subtracting any income adjustments from your gross income. Income adjustments can be expenses like:

• Dividends
• Alimony
• Royalty income
• Rent income
• Capital gains or losses
• Unemployment compensation
• Health insurance premiums

Once you have a list of your medical tax deductible expenses and your AGI, you can decide whether or not to itemize. And how can you write off dental expenses? You should just include those costs when you total up your medical bill.

Let’s use a real-life example. Say you’re an Etsy seller. In 2024, you earned $60,000 from your small business. You’re self-employed and don’t have access to an employer-sponsored health insurance plan. So, you paid for your own health insurance premiums, along with some other medical expenses throughout the year. This was the breakdown of your medical expenses in 2024:

• Health insurance premiums: $5,000
• Doctor's visits and copayments: $1,200
• Prescription medications: $800
• Dental check-ups and treatments: $500
• Vision care, including eyeglasses: $300

You decide to itemize your medical expenses on your tax return using Schedule A along with your other deductions. You total your medical expenses for the year to be $7,800. However, the IRS allows deductions for medical expenses only to the extent that they exceed 7.5% of adjusted gross income (AGI). In your case, your AGI is $60,000, and 7.5% of that is $4,500. So, you can deduct the portion of her medical expenses that exceeds $4,500.Your deductible medical expenses, in this case, amount to $7,800 - $4,500 = $3,300. This means you can deduct $3,300 from your taxable income and lower your tax liability. FlyFin’s expert CPAs can help self-employed individuals find these tax-deductible expenses as well as prepare and file their taxes. A.I. can find business deductions and make saving on taxes a walk in the park.