The IRS Clarifies What Counts as Qualified Medical Expenses
If you itemize deductions on your tax return, you may wonder: What medical expenses can I include? The IRS recently issued some frequently asked questions addressing when certain costs are qualified medical expenses for federal income tax purposes.
Basic rules and IRS clarifications
You can claim an itemized deduction for qualified medical expenses that exceed 7.5% of your adjusted gross income. You can also take tax-free health savings account (HSA), health care flexible spending account (FSA) or health reimbursement account (HRA) withdrawals to cover qualified medical expenses. However, qualified medical expenses don’t include those for things that are merely beneficial to your general health.
The answers to the IRS FAQs clarify the following points, starting with the ones we think are most interesting.
- As a general rule, the costs of over-the-counter (non-prescription) drugs don’t count as qualified medical expenses. However, the cost of insulin is eligible. Over-the-counter drugs and menstrual care products can be reimbursed tax-free by an HSA, medical expense FSA, or HRA, but the costs don’t count as qualified medical expenses for medical expense deduction purposes.
- If you pay for nutritional counseling, the cost is a qualified medical expense only if it treats […]
