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Www freetaxhelp com 21. Www freetaxhelp com   Medical and Dental Expenses Table of Contents What's New Introduction Useful Items - You may want to see: What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Www freetaxhelp com How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Yourself Spouse Dependent Decedent What Medical Expenses Are Includible?Insurance Premiums Meals and Lodging Transportation Disabled Dependent Care Expenses How Do You Treat Reimbursements?Insurance Reimbursement Damages for Personal Injuries How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons What's New Medical and dental expenses. Www freetaxhelp com  Beginning January 1, 2013, you can deduct only the part of your medical and dental expenses that exceed 10% of your adjusted gross income (AGI) (7. Www freetaxhelp com 5% if either you or your spouse is age 65 or older). Www freetaxhelp com Standard mileage rate. Www freetaxhelp com  The standard mileage rate allowed for operating expenses for a car when you use it for medical reasons is 24 cents per mile. Www freetaxhelp com See Transportation under What Medical Expenses Are Includible. Www freetaxhelp com Introduction This chapter will help you determine the following. Www freetaxhelp com What medical expenses are. Www freetaxhelp com What expenses you can include this year. Www freetaxhelp com How much of the expenses you can deduct. Www freetaxhelp com Whose medical expenses you can include. Www freetaxhelp com What medical expenses are includible. Www freetaxhelp com How to treat reimbursements. Www freetaxhelp com How to report the deduction on your tax return. Www freetaxhelp com How to report impairment-related work expenses. Www freetaxhelp com How to report health insurance costs if you are self-employed. Www freetaxhelp com 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. Www freetaxhelp com These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. Www freetaxhelp com They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Www freetaxhelp com Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Www freetaxhelp com They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Www freetaxhelp com 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. Www freetaxhelp com Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. Www freetaxhelp com 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. Www freetaxhelp com If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Www freetaxhelp com 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. Www freetaxhelp com 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. Www freetaxhelp com Separate returns. Www freetaxhelp com   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. Www freetaxhelp com 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. Www freetaxhelp com Community property states. Www freetaxhelp com   If you and your spouse live in a community property state and file separate returns, or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Www freetaxhelp com Each of you should include half the expenses. Www freetaxhelp com If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. Www freetaxhelp com If you live in a community property state, and are not filing a joint return, see Publication 555, Community Property. Www freetaxhelp com How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI (7. Www freetaxhelp com 5% of your AGI if either you or your spouse is age 65 or older)(Form 1040, line 38). Www freetaxhelp com Example. Www freetaxhelp com You are unmarried and under age 65 and your AGI is $40,000, 10% of which is $4,000. Www freetaxhelp com You paid medical expenses of $2,500. Www freetaxhelp com You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. Www freetaxhelp com 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. Www freetaxhelp com There are different rules for decedents and for individuals who are the subject of multiple support agreements. Www freetaxhelp com See Support claimed under a multiple support agreement , later. Www freetaxhelp com Yourself You can include medical expenses you paid for yourself. Www freetaxhelp com Spouse You can include medical expenses you paid for your spouse. Www freetaxhelp com 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. Www freetaxhelp com Example 1. Www freetaxhelp com Mary received medical treatment before she married Bill. Www freetaxhelp com Bill paid for the treatment after they married. Www freetaxhelp com Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. Www freetaxhelp com If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. Www freetaxhelp com Mary would include the amounts she paid during the year in her separate return. Www freetaxhelp com If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. Www freetaxhelp com Example 2. Www freetaxhelp com This year, John paid medical expenses for his wife Louise, who died last year. Www freetaxhelp com John married Belle this year and they file a joint return. Www freetaxhelp com Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. Www freetaxhelp com Dependent You can include medical expenses you paid for your dependent. Www freetaxhelp com 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. Www freetaxhelp com A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. Www freetaxhelp com The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. Www freetaxhelp com S. Www freetaxhelp com citizen or national, or a resident of the United States, Canada, or Mexico. Www freetaxhelp com If your qualifying child was adopted, see Exception for adopted child , next. Www freetaxhelp com You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Www freetaxhelp com Exception for adopted child. Www freetaxhelp com   If you are a U. Www freetaxhelp com S. Www freetaxhelp com citizen or U. Www freetaxhelp com S. Www freetaxhelp com national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. Www freetaxhelp com S. Www freetaxhelp com citizen or national or a resident of the United States, Canada, or Mexico. Www freetaxhelp com Qualifying Child A qualifying child is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, or, if he or she did, it was only to claim a refund. Www freetaxhelp com Adopted child. Www freetaxhelp com   A legally adopted child is treated as your own child. Www freetaxhelp com This includes a child lawfully placed with you for legal adoption. Www freetaxhelp com   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. Www freetaxhelp com   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. Www freetaxhelp com   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. Www freetaxhelp com    You may be able to take an adoption credit for other expenses related to an adoption. Www freetaxhelp com See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Www freetaxhelp com Child of divorced or separated parents. Www freetaxhelp com   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. Www freetaxhelp com 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. Www freetaxhelp com This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). Www freetaxhelp com Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of either of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child earlier) of any other person for 2013, and For whom you provided over half of the support in 2013. Www freetaxhelp com But see Child of divorced or separated parents , earlier, and Support claimed under a multiple support agreement, next. Www freetaxhelp com Support claimed under a multiple support agreement. Www freetaxhelp com   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. Www freetaxhelp com 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. Www freetaxhelp com   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. Www freetaxhelp com However, you can include the entire unreimbursed amount you paid for medical expenses. Www freetaxhelp com Example. Www freetaxhelp com You and your three brothers each provide one-fourth of your mother's total support. Www freetaxhelp com Under a multiple support agreement, you treat your mother as your dependent. Www freetaxhelp com You paid all of her medical expenses. Www freetaxhelp com Your brothers reimbursed you for three-fourths of these expenses. Www freetaxhelp com In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. Www freetaxhelp com Your brothers cannot include any part of the expenses. Www freetaxhelp com 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 unreimbursed amount you paid for her medical expenses in your medical expenses. Www freetaxhelp com 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. Www freetaxhelp com This includes expenses for the decedent's spouse and dependents as well as for the decedent. Www freetaxhelp com 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. Www freetaxhelp com The expenses must be paid within the 1-year period beginning with the day after the date of death. Www freetaxhelp com 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. Www freetaxhelp com Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. Www freetaxhelp com Amended returns and claims for refund are discussed in chapter 1. Www freetaxhelp com 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. Www freetaxhelp com 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. Www freetaxhelp com What Medical Expenses Are Includible? Use Table 21-1, later, as a guide to determine which medical and dental expenses you can include on Schedule A (Form 1040). Www freetaxhelp com This table does not include all possible medical expenses. Www freetaxhelp com To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. Www freetaxhelp com Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Www freetaxhelp com Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). Www freetaxhelp com See Qualified Long-Term Care Insurance Contracts in Publication 502. Www freetaxhelp com If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. Www freetaxhelp com The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. Www freetaxhelp com Note. Www freetaxhelp com When figuring the amount of insurance premiums you can include in medical expenses on Schedule A, do not include any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Www freetaxhelp com Also, do not include insurance premiums attributable to a nondependent child under age 27 if your premiums increased as a result of adding this child to your policy. Www freetaxhelp com Employer-sponsored health insurance plan. Www freetaxhelp com   Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included in box 1 of your Form W-2. Www freetaxhelp com Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included in box 1 of your Form W-2. Www freetaxhelp com Example. Www freetaxhelp com You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Www freetaxhelp com Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Www freetaxhelp com 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. Www freetaxhelp com Long-term care services. Www freetaxhelp com   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. Www freetaxhelp com This amount will be reported as wages in box 1 of your Form W-2. Www freetaxhelp com Health reimbursement arrangement (HRA). Www freetaxhelp com   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. Www freetaxhelp com This is because an HRA is funded solely by the employer. Www freetaxhelp com Retired public safety officers. Www freetaxhelp com   If you are a retired public safety officer, do not include as medical expenses any health or long-term care premiums that you elected to have paid with tax-free distributions from your retirement plan. Www freetaxhelp com This applies only to distributions that would otherwise be included in income. Www freetaxhelp com Medicare A. Www freetaxhelp com   If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. Www freetaxhelp com The payroll tax paid for Medicare A is not a medical expense. Www freetaxhelp com   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. Www freetaxhelp com In this situation you can include the premiums you paid for Medicare A as a medical expense. Www freetaxhelp com Medicare B. Www freetaxhelp com   Medicare B is supplemental medical insurance. Www freetaxhelp com Premiums you pay for Medicare B are a medical expense. Www freetaxhelp com Check the information you received from the Social Security Administration to find out your premium. Www freetaxhelp com Medicare D. Www freetaxhelp com    Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. Www freetaxhelp com You can include as a medical expense premiums you pay for Medicare D. Www freetaxhelp com Prepaid insurance premiums. Www freetaxhelp com   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). Www freetaxhelp com Unused sick leave used to pay premiums. Www freetaxhelp com   You must include in gross income cash payments you receive at the time of retirement for unused sick leave. Www freetaxhelp com 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. Www freetaxhelp com You can include this cost of continuing participation in the health plan as a medical expense. Www freetaxhelp com   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. Www freetaxhelp com You cannot include this cost of continuing participation in that health plan as a medical expense. Www freetaxhelp com Table 21-1. Www freetaxhelp com Medical and Dental Expenses Checklist. Www freetaxhelp com See Publication 502 for more information about these and other expenses. Www freetaxhelp com You can include: You cannot include: Bandages Birth control pills prescribed by your doctor Body scan Braille books Breast pump and supplies Capital expenses for equipment or improvements to your home needed for medical care (see the worksheet in Publication 502) Diagnostic devices Expenses of an organ donor Eye surgery—to promote the correct function of the eye Fertility enhancement, certain procedures Guide dogs or other animals aiding the blind, deaf, and disabled Hospital services fees (lab work, therapy, nursing services, surgery, etc. Www freetaxhelp com ) Lead-based paint removal Legal abortion Legal operation to prevent having children such as a vasectomy or tubal ligation Long-term care contracts, qualified Meals and lodging provided by a hospital during medical treatment Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) Medicare Part D premiums Medical and hospital insurance premiums Nursing services Oxygen equipment and oxygen Part of life-care fee paid to retirement home designated for medical care Physical examination Pregnancy test kit Prescription medicines (prescribed by a doctor) and insulin Psychiatric and psychological treatment Social security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (see Wages for nursing services, below) Special items (artificial limbs, false teeth, eye-glasses, contact lenses, hearing aids, crutches, wheelchair, etc. Www freetaxhelp com ) Special education for mentally or physically disabled persons 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 Weight-loss, certain expenses for obesity 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) Funeral, burial, or cremation expenses Health savings account payments for medical expenses Illegal operation, treatment, or medicine Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. Www freetaxhelp com 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 Nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. Www freetaxhelp com , unless recommended by a medical practitioner as a treatment for a specific medical condition diagnosed by a physician Surgery for purely cosmetic reasons Toothpaste, toiletries, cosmetics, etc. Www freetaxhelp com Teeth whitening Weight-loss expenses not for the treatment of obesity or other disease 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. Www freetaxhelp com See Nursing home , later. Www freetaxhelp com You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. Www freetaxhelp com You can include the cost of such lodging while away from home if all of the following requirements are met. Www freetaxhelp com The lodging is primarily for and essential to medical care. Www freetaxhelp com 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. Www freetaxhelp com The lodging is not lavish or extravagant under the circumstances. Www freetaxhelp com There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Www freetaxhelp com The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. Www freetaxhelp com You can include lodging for a person traveling with the person receiving the medical care. Www freetaxhelp com 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. Www freetaxhelp com Meals are not included. Www freetaxhelp com Nursing home. Www freetaxhelp com   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. Www freetaxhelp com This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Www freetaxhelp com   Do not include the cost of meals and lodging if the reason for being in the home is personal. Www freetaxhelp com You can, however, include in medical expenses the part of the cost that is for medical or nursing care. Www freetaxhelp com Transportation Include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Www freetaxhelp com 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. Www freetaxhelp com Car expenses. Www freetaxhelp com   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use your car for medical reasons. Www freetaxhelp com You cannot include depreciation, insurance, general repair, or maintenance expenses. Www freetaxhelp com   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents per mile. Www freetaxhelp com    You can also include parking fees and tolls. Www freetaxhelp com You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate. Www freetaxhelp com Example. Www freetaxhelp com In 2013, Bill Jones drove 2,800 miles for medical reasons. Www freetaxhelp com He spent $500 for gas, $30 for oil, and $100 for tolls and parking. Www freetaxhelp com He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. Www freetaxhelp com He figures the actual expenses first. Www freetaxhelp com He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. Www freetaxhelp com He then figures the standard mileage amount. Www freetaxhelp com He multiplies 2,800 miles by 24 cents a mile for a total of $672. Www freetaxhelp com He then adds the $100 tolls and parking for a total of $772. Www freetaxhelp com Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. Www freetaxhelp com Transportation expenses you cannot include. Www freetaxhelp com   You cannot include in medical expenses the cost of transportation in the following situations. Www freetaxhelp com Going to and from work, even if your condition requires an unusual means of transportation. Www freetaxhelp com Travel for purely personal reasons to another city for an operation or other medical care. Www freetaxhelp com Travel that is merely for the general improvement of one's health. Www freetaxhelp com The costs of operating a specially equipped car for other than medical reasons. Www freetaxhelp com 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. Www freetaxhelp com (See chapter 32 and Publication 503, Child and Dependent Care Expenses. Www freetaxhelp com ) 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. Www freetaxhelp com 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. Www freetaxhelp com 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. Www freetaxhelp com This includes payments from Medicare. Www freetaxhelp com 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 reimburse. Www freetaxhelp com Example. Www freetaxhelp com You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. Www freetaxhelp com The insurance you receive for the hospital and doctors' bills is more than their charges. Www freetaxhelp com 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. Www freetaxhelp com Health reimbursement arrangement (HRA). Www freetaxhelp com   A health reimbursement arrangement is an employer-funded plan that reimburses employees for medical care expenses and allows unused amounts to be carried forward. Www freetaxhelp com 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. Www freetaxhelp com Other reimbursements. Www freetaxhelp com   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. Www freetaxhelp com ) 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. Www freetaxhelp com   You must, however, reduce your medical expenses by any part of these payments that is designated for medical costs. Www freetaxhelp com See How Do You Figure and Report the Deduction on Your Tax Return , later. Www freetaxhelp com   For how to treat damages received for personal injury or sickness, see Damages for Personal Injuries , later. Www freetaxhelp com You do not have a medical deduction if you are reimbursed for all of your medical expenses for the year. Www freetaxhelp com Excess reimbursement. Www freetaxhelp com   If you are reimbursed more than your medical expenses, you may have to include the excess in income. Www freetaxhelp com You may want to use Figure 21-A to help you decide if any of your reimbursement is taxable. Www freetaxhelp com Premiums paid by you. Www freetaxhelp com   If you pay either the entire premium for your medical insurance or all of the costs of a plan similar to medical insurance and your insurance payments or other reimbursements are more than your total medical expenses for the year, you have an excess reimbursement. Www freetaxhelp com Generally, you do not include the excess reimbursement in your gross income. Www freetaxhelp com Premiums paid by you and your employer. Www freetaxhelp com   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. Www freetaxhelp com   See Publication 502 to figure the amount of the excess reimbursement you must include in gross income. Www freetaxhelp com Reimbursement in a later year. Www freetaxhelp com   If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you generally must report the reimbursement as income up to the amount you previously deducted as medical expenses. Www freetaxhelp com   However, do not report as income the amount of reimbursement you received up to the amount of your medical deductions that did not reduce your tax for the earlier year. Www freetaxhelp com 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 12. Www freetaxhelp com Figure 21-A. Www freetaxhelp com Is Your Excess Medical Reimbursement Taxable? Please click here for the text description of the image. Www freetaxhelp com Figure 21-A. Www freetaxhelp com Is Your Excess Medical Reimbursement Taxable? Medical expenses not deducted. Www freetaxhelp com   If you did not deduct a medical expense in the year you paid it because your medical expenses were not more than 10% of your AGI (7. Www freetaxhelp com 5% of your AGI if either you or your spouse was age 65 or older), or because you did not itemize deductions, do not include the reimbursement up to the amount of the expense in income. Www freetaxhelp com However, if the reimbursement is more than the expense, see Excess reimbursement , earlier. Www freetaxhelp com Example. Www freetaxhelp com For 2013, you were unmarried and under age 65 and you had medical expenses of $500. Www freetaxhelp com You cannot deduct the $500 because it is less than 10% of your AGI. Www freetaxhelp com If, in a later year, you are reimbursed for any of the $500 in medical expenses, you do not include the amount reimbursed in your gross income. Www freetaxhelp com 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. Www freetaxhelp com 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. Www freetaxhelp com See Reimbursement in a Later Year , discussed under How Do You Treat Reimbursements, earlier. Www freetaxhelp com Future medical expenses. Www freetaxhelp com   If you receive an amount in settlement of a damage suit for personal injuries, part of that award may be for future medical expenses. Www freetaxhelp com If it is, you must reduce any future medical expenses for these injuries until the amount you received has been completely used. Www freetaxhelp com How Do You Figure and Report the Deduction on Your Tax Return? Once you have determined which medical expenses you can include, you figure and report the deduction on your tax return. Www freetaxhelp com What Tax Form Do You Use? You figure your medical expense deduction on Schedule A (Form 1040). Www freetaxhelp com You cannot claim medical expenses on Form 1040A or Form 1040EZ. Www freetaxhelp com If you need more information on itemized deductions or you are not sure if you can itemize, see chapter 20. Www freetaxhelp com Enter the amount you paid for medical and dental expenses on Schedule A (Form 1040). Www freetaxhelp com This should be your expenses that were not reimbursed by insurance or any other sources. Www freetaxhelp com Generally, you can deduct only the amount of your medical and dental expenses that is more than 10% of your AGI (7. Www freetaxhelp com 5% if either you or your spouse was age 65 or older) shown on line 38, Form 1040. Www freetaxhelp com Impairment-Related Work Expenses If you are a person with a disability, you can take a business deduction for expenses that are necessary for you to be able to work. Www freetaxhelp com If you take a business deduction for impairment-related work expenses, do not take a medical deduction for the same expenses. Www freetaxhelp com You have a disability 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. Www freetaxhelp com Impairment-related expenses defined. Www freetaxhelp com   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. Www freetaxhelp com Where to report. Www freetaxhelp com   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. Www freetaxhelp com   If you are an employee, complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. Www freetaxhelp com Enter on Schedule A (Form 1040), that part of the amount on Form 2106, or Form 2106-EZ, that is related to your impairment. Www freetaxhelp com Enter the amount that is unrelated to your impairment also on Schedule A (Form 1040). Www freetaxhelp com Your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to other employee business expenses. Www freetaxhelp com Example. Www freetaxhelp com You are blind. Www freetaxhelp com You must use a reader to do your work. Www freetaxhelp com 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. Www freetaxhelp com The reader's services are only for your work. Www freetaxhelp com You can deduct your expenses for the reader as business expenses. Www freetaxhelp com Health Insurance Costs for Self-Employed Persons If you were self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, amounts paid for medical and qualified long-term care insurance on behalf of yourself, your spouse, your dependents, and, your children who were under age 27 at the end of 2013. Www freetaxhelp com For this purpose, you were self-employed if you were a general partner (or a limited partner receiving guaranteed payments) or you received wages from an S corporation in which you were more than a 2% shareholder. Www freetaxhelp com The insurance plan must be established under your trade or business and the deduction cannot be more than your earned income from that trade or business. Www freetaxhelp com You cannot deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer, your spouse's employer, or, an employer of your dependent or your child under age 27 at the end of 2013. Www freetaxhelp com You cannot deduct payments for a qualified long-term care insurance contract for any month in which you were eligible to participate in a long-term care insurance plan subsidized by your employer or your spouse's employer. Www freetaxhelp com 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. Www freetaxhelp com But if any of the following applies, do not use that worksheet. Www freetaxhelp com You had more than one source of income subject to self-employment tax. Www freetaxhelp com You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Www freetaxhelp com You are using amounts paid for qualified long-term care insurance to figure the deduction. Www freetaxhelp com If you cannot use the worksheet in the Form 1040 instructions, use the worksheet in Publication 535, Business Expenses, to figure your deduction. Www freetaxhelp com Note. Www freetaxhelp com When figuring the amount you can deduct for insurance premiums, do not include any advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Www freetaxhelp com If you are claiming the health coverage tax credit, subtract the amount shown on Form 8885, from the total insurance premiums you paid. Www freetaxhelp com Do not include amounts paid for health insurance coverage with retirement plan distributions that were tax-free because you are a retired public safety officer. Www freetaxhelp com Where to report. Www freetaxhelp com    You take this deduction on Form 1040. Www freetaxhelp com If you itemize your deductions and do not claim 100% of your self-employed health insurance on Form 1040, you can generally include any remaining premiums with all other medical expenses on Schedule A (Form 1040), subject to the 10% limit (7. Www freetaxhelp com 5% if either you or your spouse was age 65 or older). Www freetaxhelp com See Self-Employed Health Insurance Deduction in chapter 6 of Publication 535, Business Expenses, and Medical and Dental Expenses in the Instructions for Schedule A (Form 1040), for more information. Www freetaxhelp com Prev  Up  Next   Home   More Online Publications
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