In order to deduct medical expenses off of your taxes, they need to reach 10% of your adjusted gross income per the IRS rules. Did you know there’s a way to reduce your tax burden on medical expenses even if you’re under that 10% threshold? You can do it by using an HSA, FSA, or other tax-favored plans. There’s a lot of legal jargon in the references. The main gist is if your employer offers one of these options it would be a good idea to take advantage. Just make sure to read and understand whatever paperwork they give you to describe the plan and its features.
First and foremost, the rules change every year. I’m not a tax expert. My information comes from the IRS website. It’s important to consult a tax professional if you need help with your taxes. Now that the legal stuff is out of the way…
If you have a ton of medical expenses every year you have three main options as far as taxes are concerned.
- Health Savings Account – Pre-tax money for use on medical expenses
- Flexible Spending Account – Also pre-tax money for use on medical expenses, but with different rules.
- Itemize your taxes and reduce your tax burden by claiming medical expenses as a deduction.
Doing one or two does not prevent you from doing number three, but you can’t use the tax-free money and then claim those medical expenses as a deduction on your taxes.