Medical expense tax deductions in 2023

Tax season. The time of year when you revisit all of your favorite receipts and invoices from the past 12 months. But there is a silver lining to this – medical expenses deductions. If you’re out of the loop, you can claim medical expenses as tax write-offs (as long as they are IRS approved). Every American taxpayer can take this deduction, regardless of whether you are a W-2 employee or self-employed. You should report this deduction on Schedule A, which is attached to Form 1040. This is an itemized deduction, so you’ll need to have a record of your medical expenses. Key takeaways:

Medical expenses are tax-deductible for every taxpayer
This is an itemized deduction that is reported on Schedule A
There are IRS-set rules for qualified expenses and limits to the deduction

Table of contents

How can you write off medical expenses?...Read more

What medical expenses are tax-deductible?...Read more

What medical expenses are not tax-deductible?...Read more

How can you write off medical expenses?

Claiming the medical expense tax deduction means itemizing your tax deductions. So, if you want to write off medical expenses, you’ll have to make sure that itemizing will result in a bigger tax break than opting for the standard deduction. If you’re looking to deduct unreimbursed expenses, the amount you can deduct is capped at 7.5% of your AGI (Adjusted Gross Income). This percentage was actually lowered from 10% due to the Tax Cuts and Jobs Act of 2017. Let’s use an example. If you spent $12,000 on healthcare expenses in 2022 and had an AGI of $60,000, you could claim a tax deduction of $7,500. Again, you can only claim this tax deduction if your insurance hasn’t already paid for it. So, if you’re filing your 2022 return, this is how you’ll find how much of your medical expenses are deductible in 2022.

Infographic entitled Medical Expenses Tax Deduction Calculation showing how to calculate the medical expense deduction.

What medical expenses are tax-deductible?

There are so many types of medical expenses that the IRS allows you to deduct. Check out Publication 502 for the entire list of expenses that are eligible to claim. Self-employed individuals can also claim the health insurance deduction if they pay for it themselves. And while this deduction does not affect your self-employment taxes, a lower AGI is still good news as it will lower your federal income tax (which you’ll also have to pay). You will calculate your self-employment income on Form Schedule C. If your tax liability is over $1,000, use an estimated tax calculator to pay quarterly taxes. If you missed a deadline or applied for an extension but weren’t to pay your taxes by the original deadline (it happens to the best of us), you can use a tax penalty calculator to total your owed penalties to the IRS.

Infographic entitled 20 Tax-Deductible Medical Expenses listing 20 costs eligible for the medical expense deduction.

Itemizing these deductions can be difficult if you’re not always on top of your record keeping. With FlyFin, you just link your expenses and A.I. will find all the medical tax deductions you can claim as a self-employed individual. 1099 tax help is available 24/7 on the app from expert CPAs ready to answer questions or even prepare and file your state and federal tax returns for you.

Quick tip

You can use a 1099 tax calculator to make finding itemized deductions easier.

What medical expenses are not tax-deductible?

The IRS allows taxpayers to deduct a wide range of expenses. But certain medical expenses cannot be claimed. Like we mentioned earlier, you are not allowed to deduct medical expenses you have already been reimbursed for. Only medical expenses accumulated in the same tax year are eligible to be written off. So, if you’re filing a 2022 return in 2023, you can only deduct the expenses paid during the 2022 calendar year. This includes any COVID-19-related medical expenses. If you've incurred costs for COVID-19 treatment in 2022, you may be able to deduct them on your taxes as an itemized deduction, just like other unreimbursed medical expenses. When it comes to medical expenses, it's important to understand the tax implications of paying with certain types of accounts. For example, if you use funds from a flexible spending account (FSA) or health savings account (HSA) to cover your medical costs, you may be unable to deduct those expenses from your taxes. Why is that? Well, FSAs and HSAs are designed to offer tax advantages to their users. With an FSA, you can contribute pre-tax dollars to the account, which can then be used to pay for qualified medical expenses. Because the money you use from these accounts is already tax-advantaged, you can't double-dip by deducting those expenses on your taxes as well.

Infographic entitled Non Tax-deductible Medical Expenses listing six medical costs that are ineligible for the medical expense deduction in 2023.

The bottom line is that itemizing your medical expenses can be a good way to get the most out of your available tax deductions. This is only a viable option if you incurred a lot of out-of-pocket costs during the year that exceed the standard deduction. Make sure to save your receipts and invoices for all the qualified expenses you’re planning to deduct.You should also save all your records for deductions from your 1099 employee taxes. This way, when you sit down to file, the process will be much easier.

Adjust For Inflations

The IRS has released its yearly inflation adjustment for the 2023 tax year, aimed to give US taxpayers relief from rising inflation.

Medical expense tax deductions in 2023

How can you write off medical expenses?

What medical expenses are tax-deductible?

What medical expenses are not tax-deductible?

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