Did you know that you can deduct medical expenses that exceed 7.5 percent of your annual income?
For more than 75 years, Americans with high health care costs have been able to deduct medical expenses from their taxes. For the millions of Americans who take this deduction every year, it provides important tax relief which helps offset the costs of acute and chronic medical conditions. This includes costs associated with long-term care, assisted living and nursing homes.
According to a 2019 study commissioned by AARP, seventy percent of taxpayers who claim this deduction have incomes between $23,100 and $113,000 per year. These families are often struggling with a high deductible, office visit and prescription co-pays, and out-of-pocket expenses related to prevention, diagnosis, treatment, equipment, long-term care costs and long-term care insurance premiums.
Even people who are covered by Medicare spend a large portion of their income on out-of-pocket expenses. The average Medicare recipient spends about $5,680 out-of-pocket on medical care. Tax relief in this area can provide needed resources, especially important to middle-income individuals with high medical costs.
The Michael J. Fox Foundation teamed up with AARP in 2019 (and years prior) to lobby Congress to make this medical expense deduction permanent. While they didn’t make it permanent, Congress did extend this benefit another two years.
As you are preparing your income tax returns for the 2019 calendar year, remember that you can deduct medical expenses that exceed 7.5 percent of your annual income.