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Are Medical Bills Tax Deductible?


Are Medical Bills Tax Deductible?

You might already know that health insurance premiums are usually a tax-deductible expense for self-employed individuals. But you might be wondering, “Are my medical bills tax deductible?” “Is dental work tax deductible too?” If you're dealing with medical bills that your insurance doesn't quite cover, there's some good news. You might be in a position to get a deduction that can actually lower your tax bill. It’s important to note that writing off these costs lowers your income taxes, not your self-employment taxes. The IRS allows certain hospital and treatment expenses to be claimed as a medical tax deduction for yourself, spouse and dependents. Dental insurance deductibles can also be written off from your taxes, but not everyone is eligible to take the write-off.

Table of contents

Key takeaways...Read more

Can you deduct medical expenses?...Read more

Is cosmetic surgery tax deductible?...Read more

Are eyeglasses a tax deduction?...Read more

Can I claim prescriptions on my taxes?...Read more

Is dental insurance considered health insurance?...Read more

Are dental expenses tax deductible?...Read more

The dental insurance deductible...Read more

Are dental implants tax deductible?...Read more

Is vision insurance tax deductible?...Read more

How can you claim medical bills on your taxes?...Read more

Key takeaways

  • Medical costs can be written off from income taxes.
  • Self-employed individuals can write off their dental insurance deductible if it’s over 7.5% of AGI.
  • Medical bills can only be claimed on your taxes if you itemize your personal expenses.

Can you deduct medical expenses?

Deducting medical costs from your income taxes can provide financial relief, but it's essential to understand that not every expense can be written off. The Internal Revenue Code Section 213(d) is a good place to start. It states that “medical care means amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.” So basically, medical care is a pretty broad term and covers a lot. But it gives you a good starting point to figure out what medical costs can be written off on your taxes. The IRS has a big list of qualifying medical expenses eligible for a tax deduction in Publication 502. Some of them include:
  • Consultation fees
  • Exam fees
  • Inpatient care (meals, lodging, lab fees)
  • Organ transplants
  • Addiction programs
  • Prescription drugs
  • Transport costs (to and from medical facilities, including ambulances)
  • Birth control pills
  • Hearing aids
  • Weight loss programs (if prescribed by a medical professional)
  • Long-term care services (hiring a nurse, improvements to the house)
  • Fertility treatments
Remember that you can only get a tax deduction for medical expenses not covered by your insurance or reimbursed by your employer (if you also have W-2 income). You can't cash in on that deduction if they picked up the tab. Here's how you take the medical tax deduction. First, you have to itemize your personal expenses. This is different from itemizing business expenses when paying self-employment taxes. You can use a 1099 tax calculator to find business deductions. Every taxpayer has the option to pick between the standard and itemized deduction when paying income taxes. For 2023, the standard deduction is set at $13,850 for single filers and $27,700 for joint filers. You should generally only choose to itemize your expenses if you think your personal costs will exceed the standard deduction amount. Additionally, you can only deduct the part of your medical bill that exceeds 7.5% of your AGI (Adjusted Gross Income). Say your adjusted gross income for 2023 was $50,000. You could deduct medical expenses exceeding $3,750 (which is 7.5% of your AGI). So, any medical costs beyond that $3,750 mark are eligible for a tax deduction. Again, remember to check whether your medical costs qualify as a deductible expense.
Infographic entitled Non-Deductible Medical Expenses listing costs that are not tax deductible expenses.
Additionally, when you’re itemizing your medical expenses on your federal income tax return, you can only claim the expenses you have actually paid during that tax year. Basically, the IRS follows a "cash basis" method for medical expense deductions, which means you can't include bills or expenses that you haven't paid yet, even if the services were rendered in that tax year. For example, if you had a medical procedure in December 2022 but didn't pay the bill until the following January, you would include that expense on your tax return for the year you made the payment. This can sometimes lead to timing your payments strategically, where individuals may choose to pay outstanding medical bills in a year when they expect to itemize their deductions to maximize their tax benefit. And just like every other deduction, it's important to maintain clear records of your medical expenses, including bills, receipts, and payment records, to substantiate your deductions.

Is cosmetic surgery tax deductible?

Cosmetic surgery cannot be claimed as a medical tax deduction. In order for it to be tax-deductible, a licensed medical professional must deem a cosmetic surgery procedure medically necessary. This implies that the surgery should be necessary to address a particular medical condition or enhance a bodily function. Let’s say someone undergoes cosmetic surgery to reconstruct a breast after a mastectomy due to cancer. The cost of the surgery may be tax-deductible because it is considered medically necessary. However, if the surgery is purely cosmetic and not medically necessary, it is generally not tax-deductible. Procedures like facelifts, breast augmentations, liposuction and other elective cosmetic surgeries are typically not considered deductible medical expenses.

Are eyeglasses a tax deduction?

In most cases, eyeglasses and prescription lenses are considered personal expenses rather than a deductible medical expense. However, if you require special eyeglasses due to a medical condition, and the prescription is prescribed by a licensed professional. In that case, you may be able to deduct the cost as a medical expense. Suppose you need special glasses for a medical condition like glaucoma or cataracts, and a doctor prescribes them, you may be eligible to deduct the cost.

Can I claim prescriptions on my taxes?

You can totally write off your prescription as a medical tax deduction. But here's the deal – your doctor needs to be the one prescribing the meds, and they should be all about helping with a specific medical condition. If you're just popping over-the-counter stuff without a prescription, that won’t be tax-deductible. So, if it's prescribed and essential for your health or health condition, you're in the clear to write it off.

Is dental insurance considered health insurance?

Dental insurance is a form of health insurance, but it is specifically designed to cover the costs associated with dental care and treatment. But just like health insurance, dental insurance deductibles can also be written off on your taxes.

Are dental expenses tax deductible?

Dental work also qualifies as “medical care” under Internal Revenue Code Section 213 (d). So, certain dental expenses can be claimed as a medical deduction.
Infographic entitled What Dental Expenses Are Tax Deductible listing dental costs that can be written off.

The dental insurance deductible

Dental insurance doesn’t usually provide coverage for cosmetic procedures. It mainly covers procedures related to maintaining and improving your oral health. Dental insurance commonly operates on a three-tier structure known as 100-80-50, and it often has an annual maximum benefit, typically around $1,500. Here's how it usually breaks down:
  • Preventive care (100% Coverage): This category includes services such as annual cleanings, X-rays, and the application of sealants. Dental insurance usually covers these preventive procedures in full without requiring you to pay a portion of the cost.
  • Basic procedures (80% Coverage): Basic dental procedures like fillings, extractions and treatments for gum disease (periodontal treatment) are often covered at an 80% rate. This means you would be responsible for the remaining 20% of the cost.
  • Major procedures (50% Coverage): More extensive treatments like crowns, bridges, inlays and dentures typically receive 50% coverage from dental insurance. You would need to cover the other half of the expense. Root canals may fall into either the basic or major category, depending on the specifics of your plan. Keep in mind that not all dental insurance plans cover all procedures, so it's essential to look at your plan and understand its coverage.
 Infographic entitled Dental Insurance Coverage Categories for how to claim dental insurance.

Are dental implants tax deductible?

Dental implants can be tax deductible only if a medical professional prescribes them as a necessity to your health. If you’re getting implants just to improve your appearance, it’s a no-go.

Is vision insurance tax deductible?

While vision insurance itself isn’t tax deductible, you can deduct vision insurance premiums from your taxes, just like health and dental insurance. But again, they can’t be paid for by an employer. You can also deduct certain unreimbursed vision expenses as itemized deductions like:
  • Eye exams
  • Eye surgeries (radial keratotomy, LASIK)
  • Prescription eyeglasses (including contact lenses and sunglasses)
  • Braille books
  • Eye drops (prescription only)
If you cover any of your medical costs with funds from a flexible spending account (FSA) or a health savings account (HSA), you can't claim those expenses as deductions. This is because the money in these accounts already comes with tax benefits, so you can’t double dip.

How can you claim medical bills on your taxes?

Self-employed individuals can claim medical bills on their taxes to help them reduce taxable income and lower their overall tax liability. This is especially useful when making estimated tax payments. To take the medical tax deduction, you’ll need to itemize expenses on Schedule A. To do that, you need to total your medical costs and make sure the bill exceeds 7.5% of your AGI. You can find your AGI by subtracting any income adjustments from your gross income. Income adjustments can be expenses like:
  • Dividends
  • Alimony
  • Royalty income
  • Rent income
  • Capital gains or losses
  • Unemployment compensation
  • Health insurance premiums
Once you have a list of your medical tax deductible expenses and your AGI, you can decide whether or not to itemize. And how can you write off dental expenses? You should just include those costs when you total up your medical bill.
Infographic entitled Itemizing Medical Costs describing how to claim tax deductible expenses.
Let’s use a real-life example. Say you’re an Etsy seller. In 2023, you earned $60,000 from your small business. You’re self-employed and don’t have access to an employer-sponsored health insurance plan. So, you paid for your own health insurance premiums, along with some other medical expenses throughout the year. This was the breakdown of your medical expenses in 2023:
  • Health insurance premiums: $5,000
  • Doctor's visits and copayments: $1,200
  • Prescription medications: $800
  • Dental check-ups and treatments: $500
  • Vision care, including eyeglasses: $300
You decide to itemize your medical expenses on your tax return using Schedule A along with your other deductions. You total your medical expenses for the year to be $7,800. However, the IRS allows deductions for medical expenses only to the extent that they exceed 7.5% of adjusted gross income (AGI). In your case, your AGI is $60,000, and 7.5% of that is $4,500. So, you can deduct the portion of her medical expenses that exceeds $4,500.Your deductible medical expenses, in this case, amount to $7,800 - $4,500 = $3,300. This means you can deduct $3,300 from your taxable income and lower your tax liability. FlyFin’s expert CPAs can help self-employed individuals find these tax-deductible expenses as well as prepare and file their taxes. A.I. can find business deductions and make saving on taxes a walk in the park.

Office Supplies Tax Deduction

Office supplies are tax deductible for self-employed individuals and can be reported under the office expenses category on Schedule C.

Phone Tax Deduction

Cell phones can be a business tax deduction for self-employed individuals if it is an ordinary and necessary expense. A separate business cell phone can be fully written off.

Advertising Tax Deduction

Ordinary and necessary promotion expenses and marketing expenses are tax-deductible for self-employed individuals. They should be claimed on Schedule C when filing 1099 tax.

Business Insurance Tax Deduction

Self-employed individuals can deduct business insurance expenses from their 1099 taxes. Sole proprietors and single-member LLCs can claim it on Schedule C.

Meals Tax Deduction

The meals and entertainment deduction in 2024 allows 1099 workers to deduct 50% of business meal costs. Certain meal and entertainment expenses are still fully deductible.

Business Travel Tax Deduction

Expenses related to traveling are deductible for business purposes. A per diem rate is set for deductible travel expenses.

Charitable Contribution Tax Deduction

If you make a charitable donation to an organization, it might count as a tax deduction. Not all charitable donations count as a write-off.

Clothing And Accessories Tax Deduction

Self-employed individuals can take the clothing tax deduction if their clothes cannot be worn outside the work environment.

Commission And Fees Tax Deduction

Self-employed individuals can claim certain commissions and fees as tax deductions if they are related to their business and are ordinary and necessary.

Contract Labor Tax Deduction

If you do any contract labor, you will have to pay contract labor taxes, also known as SE tax. Estimated payments quarterly need to be made for tax liabilities over $1,000.

Internet and WiFi Tax Deduction

Self-employed individuals can deduct some of their internet bills if they work from home as part of the home office deduction. Internet costs can also be reported on Schedule C.

Rent Tax Deduction

Rent is tax deductible for self-employed individuals who work from home or have a separate office space. Some states offer renters tax credits to lower state taxes.

Repair and Maintenance Tax Deduction

Capital improvements can be claimed as a tax deduction through depreciation. Repairs to rental properties can be claimed as a business expense.

Professional and Legal Services Tax Deduction

Legal fees are tax deductible from 1099 taxes under the legal and professional fees category on Schedule C. The category also includes consultant and tax prep fees.

Shipping Tax Deduction

Business-related shipping expenses are tax-deductible. Shipping supplies and the cost of shipping are included as write-offs.

Software Tax Deduction

Software depreciation can be claimed with the straight-line method, Section 179 or through amortization. Report software depreciation on Form 4562.

Student Loan Payment Tax Deduction

Student loan interest paid is tax-deductible, and every type of education loan qualifies for the deduction.

Taxes and Licenses Tax Deduction

Self-employed individuals can take the license fee tax deduction on taxes and licenses that are ordinary and necessary business expenses.

Training and Education Tax Deduction

The educator expenses tax deduction allows eligible educators to deduct $300 of unreimbursed expenses from their taxes. Use education tax credits to lower tax liability.

Utilities Tax Deduction

Utilities are tax deductible when they are an ordinary and necessary business expense. They can be claimed with the home office deduction or as a rental property deduction.

Vehicle Insurance Tax Deduction

Interest on a car loan is tax deductible if it is used for business. Choose between the standard and actual method when claiming the vehicle deduction.

Vehicle Purchase Tax Deduction

You can claim the vehicle tax write-off if you’re self-employed and use your vehicle for business. It can also be taken if you lease your vehicle.

Mortgage Interest Tax Deduction

The mortgage interest deduction can be claimed by homeowners who itemize their expenses. You could claim the mortgage interest tax credit if you’re in a lower tax bracket.

Office Supplies Tax Deduction

Office supplies are tax deductible for self-employed individuals and can be reported under the office expenses category on Schedule C.

Phone Tax Deduction

Cell phones can be a business tax deduction for self-employed individuals if it is an ordinary and necessary expense. A separate business cell phone can be fully written off.

Advertising Tax Deduction

Ordinary and necessary promotion expenses and marketing expenses are tax-deductible for self-employed individuals. They should be claimed on Schedule C when filing 1099 tax.

Business Insurance Tax Deduction

Self-employed individuals can deduct business insurance expenses from their 1099 taxes. Sole proprietors and single-member LLCs can claim it on Schedule C.

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