Don’t Overlook These 6 Medical Tax Deductions

Long-term care

You can deduct the cost of qualified long-term care services for a chronically ill individual, deduct wages and other amounts you pay for nursing services, and deduct medical care in a nursing home or similar institution for yourself, your spouse or your dependent. This includes the cost of meals and lodging in the facility if a principal reason for being there is to get medical care. The resident must be chronically ill. Being at the facility for personal reasons does not qualify.

Certain amounts of premiums paid for qualified long-term care insurance contracts can also be deducted. The long-term care insurance contract must meet certain IRS requirements, and the amount of premium you can include is limited based on your age. Research thoroughly or get professional advice before taking this deduction.

If you have a long-term care insurance policy that makes payments toward your nursing home care, you need to subtract the insurance payments before taking a deduction.

Life-care fees

Sometimes called a “founder’s fee,” a life-care fee is paid to a retirement home for the facility’s promise to provide lifetime care that includes medical care. The fee may be paid monthly or as an upfront lump-sum amount. Only the medical portion of a life-care fee can be deducted as a medical expense. The IRS says taxpayers can use a statement from the retirement home to prove the amount properly allocable to medical care. 

Home improvements

Improvements or special equipment installed in a home can qualify as medical expenses if its main purpose is medical care. Examples include entrance ramps into the home, handrails or grab bars, lift chairs to get up stairs, and modifications such as widening doorways or lowering kitchen cabinets to make them accessible.

If the cost of a permanent improvement increases the value of the home, the deduction must be reduced by that increase. For example, if $30,000 of improvements were made and they increased the value of the home by $20,000, then the deductible medical expense would be $10,000. If there is no increase in property value, the full cost qualifies as a medical expense. 

Keep receipts to document the money spent on the improvements. Have an appraiser determine whether the improvement increased the property value, and by how much, says Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals. He also advised keeping documentation from a doctor that the home improvements were medically necessary. 

“It could be a suggestion from a medical professional to say you need to have this work done or move to another location that has the services available,” O’Saben says. “In order to maintain your independence, you're going to have to have this work done. And that would help to support that deduction you’re taking on a tax return.”

It’s not enough for family members to believe the improvements are needed.

“It’s different from a decision that Mom is living by herself and the children decide, ‘We need to give Mom better accessibility.’ We need a professional to determine that. I mean, we’d all like to have Mom have as much convenience that she can, but that doesn’t necessarily make it rise to the level of a medical expense,” says O’Saben, an enrolled agent in the St. Louis area.

Costs must be reasonable and related to your medical condition. Money paid for upkeep of the improvements can qualify as a medical expense as long as the reason for them is medical care. 

Wheelchairs and scooters

The cost of a wheelchair or scooter used for the relief of a sickness or disability is a medical expense. The cost of operating and maintaining the wheelchair or scooter can also be deducted. 

Oxygen

Money spent on oxygen and related equipment can be deducted if it is used to relieve breathing problems caused by a medical condition.

Masks…and everything else

If you reach the 7.5 percent AGI threshold, likely because of big-ticket items, make sure you are calculating all medical expenses for the year. Those unreimbursed costs can range from items like eyeglasses and hearing aids to CPAP machines and crutches, notes Kamila Elliott, a certified financial planner in Atlanta. Don’t forget about mileage — you can deduct miles for traveling to and from medical appointments at a rate of 21 cents per mile in 2024, Elliott says.

Finally, make sure you are managing medical expenses as best you can, O’Saben advises. Explore whether you have discounts through a membership or association.

“It's possible you've got benefits you’re not fully aware of, through various associations you might belong to. Uncover those stones,” O’Saben says. “Because I’m not as interested in a medical expense deduction as I am in a reimbursement. A reimbursement would be a lot better than a deduction. It’s dollar for dollar back in your pocket.”