Did You Have a Lot of Medical Expenses? Save Your Receipts Because They May Be Tax Deductible

The Internal Revenue Service (IRS) is the government agency that is responsible for figuring out U.S. tax information. And while many people dread hearing from them unless they are issuing a tax refund, there are actually some benefits to learning more about what the agency does. That's because the IRS is the group that says what you can and cannot deduct on your taxes, which directly determines how much you owe, or get back, each year come tax time.

However, these rules are hard to read.

And unless you have a deep understanding of complicated tax laws, most people turn to the professionals when they need help filing their taxes or digesting some of the more complex rules about filing taxes.

That being said, some tax rules are a little more cut and dry, like the ones that determine whether or not medical expenses are tax-deductible. Keep reading to learn more about which medical bills you can deduct, and which ones you cannot, before you throw away the receipts from your doctor.

The IRS has an entire section of its website dedicated to medical and dental expenses, where it breaks down the ins and outs of these types of bills.

First, only those who itemize their deductions on the Schedule A form are able to deduct their medical and dental expenses. Secondly, these expenses must exceed 7.5 percent of your adjusted gross income (AGI) for the year. In short, if your ADI is $70,000, your medical expenses would need to be more than $5,250 to qualify.

As for the types of expenses you can deduct, they have to be those you paid for out of pocket, where payments were given directly to a doctor, medical provider, or hospital. They would include things like co-pays and the costs associated with your healthcare that aren't covered by your health insurance.

For example, if you made a $50 co-pay to your doctor, and your insurance later reimbursed you $25 for the visit, you can only deduct the other $25 that wasn't covered by your health insurance.

The list of bills you can deduct is far longer and more complicated than the ones you cannot. That's because the rules about what doesn't qualify as a tax-deductible expense are pretty cut and dry. According to the IRS, some of the items that you may not use in your deductions include, but aren't limited to:

• The amount of money that your employer pays towards your insurance, unless it is included in box 1 of your W-2
• Nonprescription medications like certain over-the-counter products

• Anything associated with the costs of a funeral or burial service
• Nonprescription cosmetics and toiletries like toothpaste or Chapstick
• Certain types of cosmetic surgeries
• Nonprescription treatments or medications to stop smoking
• Programs or trips that are taken to improve your mental or physical health

As with anything you claim on your taxes, you'll also want to ensure that you have proof of how much you paid before you deduct it, just in case you ever get audited.