The older people get, the more medical expenses they tend to incur. The only saving grace is the expenses may add up to a federal income tax deduction. Specifically, you can deduct medical expenses you are not reimbursed for to the extent they exceed 7.5% percent of your adjusted gross income (AGI) for 2020. However, the write-off is only available if you itemize using Schedule A of Form 1040.
From the IRS Website
If you itemize your deductions for a taxable year on Schedule A (Form 1040), Itemized Deductions, you may be able to deduct expenses you paid that year for medical and dental care for yourself, your spouse, and your dependents. You may deduct only the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. You figure the amount you’re allowed to deduct on Schedule A (Form 1040).
What if you pay medical expenses for an elderly relative?
You can add those expenses to your own for tax deduction purposes if the relative is your dependent, which means you pay over half of that person’s support for the year and he or she does not file a joint federal income tax return. (Source: Internal Revenue Code Sec. 213(a)) However, you must still clear the required percentage of AGI hurdle to claim any deduction.
The itemized federal tax deduction for medical expenses can be meaningful for elderly people who have high expenses and relatively low adjusted gross incomes. Again, don’t forget that you may be entitled to deduct medical expenses that you pay for an elderly loved one who is your dependent as defined above.
Contact Herzog Law for help.