Maximize Medical Deductions

Medical costs seem to increase every year. There is a way to get Uncle Sam to foot some of the doctor bills, but you need to make sure you know and follow the rules.

The Internal Revenue Service lets you deduct medical costs on your 2012 tax return as long as they are more than 7.5 percent of your adjusted gross income. (For the 2013 tax year, your medical expenses must exceed 10 percent of your adjusted gross income.) This percentage may seem unattainable at first glance, but with a little tax triage you might just meet it.

Don’t overlook the medical expenses of everyone listed on your tax return. Medical and dental bills for you, your spouse and your dependents count toward reaching the allowable deduction limit. You might be able to count some medical expenses you paid for a parent, even if Mom or Dad isn’t considered your dependent for exemption purposes.

And while it’s not something we want to think about, don’t forget about medical bills you paid for a deceased dependent in the year they were paid, whether before or after the person passed away.

Once you’re confident you know just whose costs are covered, make sure you don’t miss one.

Often-overlooked medical deductions:

• Travel expenses to and from medical treatments. The IRS evaluates the standard cents-per-mile allowance each year. Because of a midyear inflation adjustment in 2012, you can deduct eligible medical travel at 23 cents per mile. For 2013, the medical travel rate is 24 cents per mile.
• Insurance payments from already-taxed income. This includes the cost of long-term care insurance, up to certain limits based on your age.
• Uninsured medical treatments, such as an extra pair of eyeglasses or set of contact lenses, false teeth, hearing aids and artificial limbs.
• Costs of alcohol- or drug-abuse treatments can be counted on your Schedule A.
• Laser vision corrective surgery is a tax-allowable procedure.
• Medically necessary costs prescribed by a physician. That means if your doctor told you to add a humidifier to your home’s heating and air-conditioning system to relieve your chronic breathing problems, the device — and additional electricity costs to operate it — could be at least partially deductible.
• Some medical conference costs. You can count admission and transportation expenses to the conference if it concerns a chronic illness suffered by you, your spouse or a dependent. Meals and lodging costs while at the seminar, however, are not deductible.

Special medical needs

If you have special needs, however, there are some costs you can write off. Take into account the cost of a wheelchair, crutches, equipment that enables a deaf person to use the telephone or devices that provide television closed-captioning. Don’t forget a Seeing Eye dog or canine for the hearing-impaired, or the costs to retrofit your car with special hand controls or space to hold a wheelchair.

Some home remodeling also might be just the prescription for a tax break, as long as you follow your doctor’s orders and IRS rules. If you need, for example, to add a chair lift to get up and down the stairs because of a medical condition, this is considered a legitimate expense.

Changes to your home to make it more accessible for a handicapped resident also are allowable.

Elevators, however, generally aren’t deductible. The IRS considers this a structural change that could increase the value of your house and, therefore, doesn’t allow it as a medical deduction.

Changes include