Quick Tax Tip: Which Medical Expenses are Deductible?
Social media is at it again. We noticed recently a prolific promulgater of bad tax advice posting about the ability to deduct spa trips, massages, and therapy expenses for tax purposes. As with most tax advice - there’s an “it depends” on whether something can qualify as a deduction.,
The IRS states that in order for medical expenses to be deductible “medical care . . . must be primarily to alleviate or prevent a physical or mental disability or illness”. Here is quick list of medical expenses that are deductible under the right circumstances:
Physical Therapy: If this is done to treat an injury
Vitamins: If they are recommended by a medical practitioner to treat a diagnosed medical conditioned
Medications: If they are recommended by a medical practitioner to treat a diagnosed medical conditioned
Counseling: If administered by a psychiatrist or psychologist
Addiction Treatment: Yes - both inpatient and outpatient
Non Traditional Medical Practitioners: Yes - but make sure you have good records to support treatment
Massages: If they’re recommended/prescribed by a medical professional
Spa Facials: No, I wish. This would be considered a personal expense and thus not deductible.
As you can see - the theme here is as long as the treatment is being recommended by a professional, you’re usually able to deduct it.
Unfortunately - medical deductions occur on Schedule A - where taxpayers also report deductions for state taxes paid, property taxes, mortgage interest payments, and charitable contributions (among other things). Taxpayers take the higher of the standard deduction or their total itemized deduction against their taxable income - so if you don’t itemize, you won’t get any benefit in tracking your medical expenses.
If you do itemize, your total medical expenses that are deductible start at 7.5% of your Adjusted Gross Income (AGI) - meaning if your AGI for the year was $100k, you’d have to incur $7.5k of medical expenses BEFORE you can start taking deductions on your Schedule A for it.
If you need a European vacation destination and want a spa day to go with it, the Burgenstock resort at Lake Lucerne is second to none. Just don’t expect us to sign off on a tax deduction for the trip.