How to Prepare your Medical and Dental Expense Deduction
At Apollo Medical Travel, our mission is to make high quality medical care accessible to everyone. To that end, it is paramount to ensure that medical travelers are informed about every last dollar they are entitled to when they pull out their passport for their health.
In this resource, we will walk you through the process of preparing the medical and dental expenses section on the Schedule A Itemized Deductions on your Form 1040 Individual Income Tax Return or 1040-SR Tax Return for Seniors. With this information you will be able to get the tax deduction you deserve.
How Much Can I Deduct?
You can deduct the medical and dental expenses that you pay out of pocket and for which you are not reimbursed for by insurance that exceed 7.5% of your Adjusted Gross Income (AGI) over the course of the tax year. You can calculate your AGI with this free online tool:
Adjusted Gross Income Calculator
Example:
Suppose you have an AGI of $50,000. You can get a deduction on your taxes for all of the medical expenses you pay out of pocket that exceed $3,750 (7.5% of your AGI). That means if you pay $5,000 for qualifying medical expenses over the course of the year, you will be able to reduce your taxable income by $1,250 ($5,000 – $3,750).
Whose Medical Expenses Can I Deduct?
You can include your own medical expenses and those of your spouse and dependents. For specific situations, see Publication 502 pages 3-5
What Medical and Dental Expenses Can I Deduct?
You will need to add up all of your qualifying expenses and use this number on line 1 of your Schedule A to your Form 1040 or 1040-SR. Qualifying expenses specific to procedures offered by Apollo Medical Travel are listed below.
Aesthetic
Patients can include medical expenses undergone to correct deformities resulting from congenital abnormalities, personal injury resulting from accidents or trauma, or disfiguring disease.
Example:
A cancer survivor who has undergone a mastectomy (a breast removal to fight cancer) can deduct the expense of a breast reconstruction.
A patient who undergoes a hair transplant due to male pattern balding will not qualify for the deduction.
Dental
You can include in medical expenses the amount you pay for the prevention and alleviation of dental disease. Procedures like teeth whitening do not qualify for this deduction as they are cosmetic.
Fertility
You can include the cost of procedures such as In Vitro Fertilization (IVF) and Intrauterine Insemination (IUI) towards your medical expenses deduction.
Prescription Medication
You can include the cost of prescription drugs you purchase and consume in a foreign country if the drug is legal in both the foreign country and the United States.
Travel
You can include the out of pocket expenses for gas, tolls, and parking when you use your car for medical reasons. If you don’t want to use your actual expenses, you can use the standard medical mileage rate of $0.20/ mile.
You can include in medical expenses the amount you pay for transportation if the trip is primarily for, and essential to, receiving medical services. You may be able to include up to $50 per person per night. Meals are not included.
Ok, I Know My AGI and My Expenses. Now What?
Now that you have calculated your AGI and your medical and dental expenses for the year, you can complete your Medical and Dental Expenses Portion, which is lines 1-4 of your Itemized Deductions Schedule A.
Line 1: Total Applicable Medical and Dental Expenses
Line 2: Adjusted Gross Income (AGI)
Line 3: AGI x 7.5% (.075)
Line 4: Line 1 – Line 3 (Expenses – 7.5% of your AGI) = Deduction!
*If your medical and dental expenses are not greater than 7.5% of your AGI you do not qualify for a deduction.
Taxes can seem overwhelming, and while we at Apollo Medical Travel are not tax professionals, we can ensure that you will have the documentation that you need to be able to secure your deduction and defend it in case of an audit. We work with all of our providers to ensure that you have a written invoice for the work performed, and we are happy to provide guidance regarding your medical and dental expense deduction.
Your health and financial well-being are paramount to us. We know that you have a world of choices when it comes to medical tourism, but there is nobody better to have at your back than your friends here at Apollo Medical Travel.
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