Medical deductions can ease the financial burden of federal income taxes for many seniors, so knowing which expenses the IRS allows as deductions is critical for caregivers who help prepare a loved one’s tax return. Although you’re probably aware that out-of-pocket costs for prescription drugs, medical care, and health insurance premiums qualify as deductions, you may not realize that the IRS also allows medical expenses for equipment prescribed by a physician due to a specific ailment or disability. This can include medical alert devices.
To take advantage of medical deductions on a federal income tax return, a senior must itemize deductions instead of taking the standard deduction. When itemizing deductions, only those out-of-pocket medical and dental costs that exceed 10 percent of the taxpayer’s adjusted gross income (AGI) are allowed unless the taxpayer or her spouse is 65 or older, in which case the medical deduction floor remains at 7.5 percent of the AGI. This exemption, which has not been well publicized since it began in January 2013, is only valid through December 31, 2016, so caregivers should ensure that their senior loved ones take advantage of this break on medical deductions if they or their spouses qualify.
Determining IRS-Approved Medical Expenses
Once a senior meets the medical deduction threshold, IRS-approved medical deductions that do not require a prescription cover a wide range of equipment, including artificial limbs and teeth, Braille books and magazines, and medically necessary wigs and wheelchairs. This list also includes equipment designed to allow a person with physical disabilities to communicate better, such as special telephone equipment using teletypewriters (TTY) or telecommunications devices for the deaf (TDD). TV adapters that display the audio portion of programs as subtitles for a person with hearing impairments are also approved, as are visual alert systems.
Since many seniors with hearing, vision, or other physical disabilities have installed medical alert systems, you may wonder if those devices are tax deductible. Intuit, a firm that produces the tax software TurboTax, states that if a doctor prescribes a medical alert system because of a specific ailment or disability that requires this device, the medical alert system would be considered a tax-deductible medical expense. Be sure to consult with your senior loved one’s CPA or tax advisor about such deductions, however, before filing a return.
Obtaining a Prescription for Medical Equipment
With all the new technology available to help keep seniors safe and independent in their homes today, physicians are now often willing to prescribe medically necessary equipment. Stairlifts or wheelchair platform lifts are one tax-deductible example. To help your senior loved one maximize medical deductions on his federal income tax return, consult with his doctor to see if she will write a prescription for any necessary medical equipment. It’s worth the extra time and effort to take steps toward reducing your loved ones’ taxes and easing their financial burden, especially if they have a physical disability or are on a fixed income.