Maximizing Medical Expense Tax Deductions: A Strategic Guide to Healthcare-Related Tax Savings

Understanding medical expense tax deductions begins with the IRS threshold: you can only deduct qualified medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI). For example, if your AGI is $60,000, the 7.5% threshold equals $4,500; thus, only expenses above this amount are deductible. Eligible costs include payments for diagnosis, treatment, prevention, and related services, such as doctor visits, hospital care, prescription medications, and certain medical equipment. Long-term care services and insurance premiums may also qualify, but over-the-counter items and cosmetic procedures generally do not. Strategic tax planning involves bundling expenses into a single tax year to surpass the threshold. High-deductible health plans (HDHPs) paired with Health Savings Accounts (HSAs) offer triple tax advantages: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified expenses are tax-free. In 2024, HSA contribution limits are $4,150 for self-coverage and $8,300 for family plans, with an additional $1,000 catch-up for those 55 and older. Document all expenses meticulously, using IRS Publication 502 as a reference, and consult a tax professional to optimize deductions while ensuring compliance. This approach not only reduces your tax burden but also enhances financial resilience against healthcare costs.