Thursday, May 23, 2024

Can Medical Expenses Be Deducted From Taxes

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Residential Aged Care Expenses

What medical expenses can be deducted from your taxes?

Residential aged care expenses and payments for in-home care must have been made to an approved care provider for personal or nursing care and accommodation in respect of an approved care recipient.

An approved care recipient is a person who has been assessed by the aged care assessment team as eligible for residential aged care or in-home aged care.

Residential aged care payments can cover:

  • Daily fees
  • Periodic payments of accommodation bonds
  • Amounts drawn from a lump sum accommodation bond, and
  • Daily accommodation payments.

Where Can I Get My Medical Scheme Tax Certificate

This certificate details exactly how much was paid to the medical aid for yourself and your dependents over the course of the tax year . It also details how much money you paid for other medical expenses, such as medicines and doctors expenses, which you claimed for, but your medical aid did NOT cover. This information is important for your tax return and the information included can improve your chances of getting a tax refund when you submit.

Your medical scheme provider is supposed to send your tax certificate to you by email or post by July, but if they havent done it yet, you can ask for it directly. Most medical aid providers offer a self-service portal online where you can login and download your tax certificate. Others have a call centre that you can phone and ask that they post or email your tax certificate to you.Select your medical aid / medical scheme below to get your tax certificate:

If yes, click on the relevant link and let us guide you around your medical aid tax certificate!

You Must Itemize To Claim The Deduction

You must itemize your deductions to claim medical expenses. This means you must complete and file Schedule A with your tax return. It could be worth your while if you’re eligible to claim several other itemized deductions as well, so they all add up to more than the year’s standard deduction. This can be a bit of a stretch, however, after the passage of the TCJA.

You can’t claim the standard deduction and itemize, tooit’s one or the other.

The TCJA nearly doubled standard deductions for all taxpayers, and theyre adjusted annually to keep pace with inflation. They are:

  • $12,400 in 2020 to $12,550 in 2021 for single taxpayers and married taxpayers who file separate returns
  • $18,650 in 2020 to $18,800 in 2021 for head-of-household filers
  • $24,800 in 2020 to $25,100 in 2021 for married taxpayers filing jointly

You’d pay taxes on more income than you have to if you don’t claim the standard deduction and if you don’t have itemized deductions that total more than the applicable standard deduction amount.

Medical expenses can be deducted on line one of the 2020 Schedule A, if it turns out that itemizing is in your best interest. Complete lines two and three of Schedule A to calculate your threshold limitation on medical expenses. Lastly, line four shows the deductible portion of what you paid.

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Claiming An Elderly Person As A Dependent

There is an exception to the 50% financial support rule made when two or more individuals, typically family members, together contribute at least 50% of the support for the elderly dependent. In this case, the contributors can prepare a mutually agreed-upon Multiple Support Declaration.This allows one of the contributing individuals to claim the elderly as a dependent and deduct that elderly persons medical expenses. When using a Multiple Support Declaration, the tax filer needs only to have contributed 10% of the total. Make note, the individual who is deducting the expenses can only use the amount they personally paid.

Who Can Claim The Medical Expense Deduction

What Medical Expenses Can I Deduct From My Taxes?

You can only claim the medical expense deduction if you itemize your deductions on your tax return. That means you need to have total deductions that are worth more than the standard deduction. Most people are not eligible to itemize after the 2017 tax reform increased standard deductions.

Your filing status determines your standard deduction. The 2020 standard deductions are:

  • $12,400 if you file as single or married filing separately

  • $24,800 for married couples who file a joint return

  • $18,550 for a head of household

The 2021 standard deductions are:

  • $12,550 if you file as single or married filing separately

  • $25,100 for married couples who file a joint return

  • $18,800 for a head of household

If your combined tax deductions, including the medical expense deduction, are less than or equal to the standard deduction for your filing status, then youâll claim the standard deduction.

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Other itemized deductions that you may be able to claim include the mortgage interest deduction, the state and local tax deduction, and deductions for charitable contributions.

Self-employed people may qualify to take the deduction if they had a net profit for the year.

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Additional Medical Expenses Tax Credit

The Additional Medical Expenses Tax Credit is in place to provide some credit for excess medical expenses and is made up of two parts:

  • Excess medical aid contributions, and
  • Qualifying medical expenses /Out-of-pocket medical costs , which you pay for yourself.
  • Excess medical aid contributions are relatively straightforward to work out, as youll use the total amount you paid towards medical aid as your first amount and then apply the formula applicable to your individual situation. Well get to this in a moment.

    Out-of-pocket expenses are a bit more complex. Out-of-pocket medical costs, as per SARS, are those qualifying medical expenses that youve paid for yourself, which have not been reimbursed by medical aid. If you submit ALL your medical expenses to your medical aid, this amount is normally reflected on your tax certificate from the Medical Aid as ‘claims not paid’, ‘amount not reimbursed’ or something similar. Remember that this won’t include expenses you paid for but didn’t submit to medical aid – you’ll have to add those up separately. This doesnt mean that you can include all and sundry from the pharmacy though! SARS has certain restrictions on what qualifies as an out-of-pocket medical expense.

    What Medical Expenses Can I Deduct From My Taxes

    Medical expenses add up quickly, especially if the costs arent covered and reimbursed through your health insurance. If you or your dependents have racked up medical expenses, you might have the opportunity to claim them as a deduction on your next tax return.

    To ensure youre making the most of the medical expense deduction, AA Tax & Accounting Services is here to breakdown how it works.

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    What Amount Can You Claim

    Line 33099 You can claim the total of the eligible expenses minus the lesser of the following amounts:

    • $2,397
    • 3% of your net income

    Line 33199 You can claim the total of the eligible expenses minus the lesser of the following amounts:

    • $2,397
    • 3% of your dependant’s net income


    The maximum provincial or territorial amount you can claim for medical expenses may differ depending on where you live. For more information, see the information guide for your province or territory of residence in your income tax package. If you live in Quebec, visit Revenu Québec.

    The Twelve Month Rule

    How Do You Deduct Medical Expenses For Tax Purposes?

    Unlike most other expenses, medical expenses dont have to follow a calendar year. You are allowed to pick your 12 month period. As long as the end of the 12 months falls within the tax year you are reporting, you are free to choose the best time frame for your situation. Lets say you had a ton of medical expenses from November until March. Both kids got braces, your spouse spent a bundle on glasses, and you had to have some physiotherapy due to a fall. If you choose to follow the calendar year, you might be shorting yourself some cash. The 3% rule will be applied to the expenses in two different tax years. If you make your twelve month period from November 1 until October 31, youll be able to lump all of these expenses together on your return that October falls into. This maximizes the impact as the total will only be subjected to the three percent rule once. If you choose to alter your twelve month period, make sure you keep track of the dates for future years.

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    What Is The Deduction Value For Medical Expenses

    The deduction value for medical expenses varies because the amount changes based on your income. In 2020, the IRS allows all taxpayers to deduct their total qualified unreimbursed medical care expenses that exceed 7.5% of their adjusted gross income if the taxpayer uses IRS Schedule A to itemize their deductions.

    Your adjusted gross income is your taxable income minus any adjustments to income, such as contributions to a traditional IRA and deductible student loan interest.

    For example, if you have an AGI of $45,000 and $5,475 of medical expenses, you would multiply $45,000 by 0.075 to find that only expenses exceeding $3,375 can be included as an itemized deduction. This leaves you with a medical expense deduction of $2,100 .

    Additionally, as a result of the Tax Cuts and Jobs Act of 2017, the standard deduction has nearly doubled from where it was in 2016. For 2020, the standard deduction is $12,400 for single taxpayers and $24,800 for married taxpayers filing jointly. The amount of the standard deduction usually determines whether or not you itemize your deductions or take the standard deduction. Unless your deductions are higher than the standard deduction, you usually won’t itemize, which means you won’t receive medical expense deductions.

    What Can You Deduct

    • You may deduct the cost of gluten-free food that is in excess of the cost of the gluten containing food that you are replacing. For example, if a loaf of gluten-free bread costs $5.00 and a comparable loaf of gluten containing bread costs $2.50, you may include in your medical expenses the excess cost of $2.50 for each loaf of bread you purchase.
    • The full cost of special items needed for a GF diet may be deducted. An example is the cost of xanthan gum used in gluten-free home baked items, which is never used in a gluten containing recipe.
    • If you make a special trip to a store to purchase GF foods, the cost of your transportation to and from the store is deductible. For 2021, you may deduct 16 cents per mile traveled. You may also include tolls and parking fees.
    • The full cost of postage or other delivery expenses for GF foods made by mail order are deductible.

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    What Medical Costs Are Tax Deductible

    Qualifying medical expenses are particular, according to the IRS guidelines. Heres a short rundown of the most common qualifying medical expenses:

    • Preventative care
    • Visits to psychiatrists and psychologists
    • Prescriptions
    • Travel expenses, such as car mileage and parking fees

    Any expenses that are reimbursed through an insurance policy are not deductible. Furthermore, cosmetic procedures dont count as deductible expenses, as well as non-prescription drugs, except for insulin. General health products, such as vitamins and toothpaste, are also not deductible.

    Life & Health Insurance Offered By Td

    How to Deduct Medical Expenses Under New Tax Law

    TD Accident and Sickness Insurance can provide financial coverage to help you and your family in the event of a covered critical accident or illness resulting in disability, a serious injury, or death. Supplement any existing coverage you may already have through life insurance, employee benefits, or your provincial health care plan. Although these payments may not be tax deductible, benefits are received tax-free.

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    Lower Your Health Care Costs

    Itemizing medical expenses is just one way to lower your health care costs. Your employer may offer a Flexible Spending Account , or you may be able to set up a Health Savings Account both provide tax advantages to reduce the cost of health care.

    If you pay any health insurance premiums out of pocket, know that a late or missed payment can negatively affect your . Consider setting up automatic payments to ensure that both you and your credit stay in good health.

    How Do You Claim Medical Expenses

    You can claim medical expenses on line 33099 or line 33199 of your tax return under Step 5 Federal tax.

    Line 33099 You can claim the total eligible medical expenses you or your spouse or common-law partner paid for any of the following persons:

    • yourself
    • your spouse or common-law partner
    • your or your spouses or common-law partners children who were under 18 years of age at the end of the tax year

    Line 33199 You can claim the part of eligible medical expenses you or your spouse or common-law partner paid for any of the following persons who depended on you for support:

    • your or your spouses or common-law partners children who were 18 years of age or older at the end of the tax year, or grandchildren
    • your or your spouses or common-law partners parents, grandparents, brothers, sisters, uncles, aunts, nephews, or nieces who were residents of Canada at any time in the year

    You have to calculate, for each dependant, the medical expenses that you are claiming on line 33199.

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    Medical Education Expense Deductions

    IRS Publication 502 provides that You can include in medical expenses amounts paid for admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent.

    The costs of the medical conference must be primarily for and necessary to the medical care of you, your spouse, or your dependent. The majority of the time spent at the conference must be spent attending sessions on medical information However, you may not deduct the costs for meals and lodging while attending the medical conference.

    For the final determination for what is tax deductible, refer to IRS ruling 2000-24 and IRS Publication 502.

    The Three Percent Rule

    Are medical expenses tax deductible?

    Many taxpayers expect to receive a deduction for every cent theyve paid in medical expenses. The amount you can claim is actually based upon your income. Since the medical expenses credit is designed to assist Canadians who have significant expenses over the course of a year, only a portion of your medical expenses translates to a deduction. From your total medical expenses, the eligible amount is 3% of your income or the set maximum for the tax year, which ever is less. For example, if your net income is $60,000, the first $1800 of medical expenses wont count toward a credit. If your medical expenses total, $2000, only $200 will be applied to your bottom line.

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    What Is An Unreimbursed Medical Expense

    First, note that to deduct a medical expense, it has to be an unreimbursed expense. That means if you pay for an expense out-of-pocket but get reimbursed by your insurance company or anyone else, you cant claim that expense as paid by you.

    You may be able to deduct expenses like medical supplies, dental treatments, and insurance premiums. See What Medical Expenses are Deductible? Medical expenses for your spouse and qualifying dependents naturally count too.

    Eligibility To Claim Tax Deduction

    Deductions on tax can be claimed if the medical expenses are incurred on the family members or parents, who are more than 60 years in age. As per the law, a family member includes self, spouse and children. Tax deduction on medical expenses can be claimed by an individual who has sustained the expenses. Thus, if you are above 60 years in age and are not insured under any other existing health insurance plan, then the deduction can be claimed by you.In case, if a person has incurred medical expenses for their parents, aged more than 60 years, then he can claim the deduction.

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    What Documents Are Needed To Support A Medical Expenses Claim

    • Receipts Must show the name of the company or individual to whom the expense was paid.
    • Prescription If a prescription is required to support a claim.
    • Certification in writing Required if certification in writing is a prerequisite for eligibility.
    • Form T2201 Disability Tax Credit Certificate If CRA approved DTC is required.

    If the person for whom you are claiming the medical expense is already approved for the disability tax credit for the fiscal year in question, you do not need to send a new Form.

    What Are Qualifying Medical Expenses For Tax

    Medical Deductions Taxes Medicine

    Examples of qualifying medical expenses are any amounts that were paid by you, as the taxpayer, during the year of assessment:

    • For professional services rendered and medicines supplied by a registered medical practitioner, dentist, optometrist, homeopath, naturopath, osteopath, herbalist, physiotherapist, chiropractor or orthopaedist to you or any of your dependant
    • To a nursing home or hospital, or any duly registered or enrolled nurse, midwife or nursing assistant in respect of the illness or confinement of the person or any dependant of the person
    • For medicines prescribed by a registered medical practitioner and acquired from a pharmacist
    • Medical expenses incurred and paid outside South Africa

    It’s important to note that over the counter medicines – like cough syrups, headache tablets or vitamins – don’t qualify as medical expenses that are taken into account for tax purposes, unless theyre specifically prescribed by a registered medical practitioner and acquired from a pharmacist. Now that we know what qualifies as medical expenses you can claim back, lets look at how you work out your additional medical expenses tax credit.

    How to calculate your Medical Tax CreditThe formula you need to use depends on two factors:

  • Your age – whether you’re older or younger than 65, and
  • If you or your dependent have a disability.
  • SARS is strict on the definition of a qualifying disability. According to the Income Tax Act, a disability is:

    Age and Disability Status


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