When you have a very expensive chronic illness (hint: diabetes is a very expensive chronic illness), it pays to be prepared when it comes to doing your taxes and squeezing every dime out of your medical deduction. You need to begin the hunt for your expenses - and the receipts for those expenses.
Topic 502 of the IRS is all about Medical and Dental Expenses. We all need to know about this topic. Here’s the deal if you itemize your expenses on your 1040:
For years beginning after December 31, 2012, you may deduct only the amount of your total medical expenses that exceed 10% of your adjusted gross income or 7.5% if you or your spouse is 65 or older. The 7.5% limitation is a temporary exemption starting January 1, 2021 to December 31, 2020 for individuals age 65 and older and their spouses.
It Pays To Itemize
It pays to itemize. Seriously. Plain and simple: we spend a lot of our diabetes care, but we don’t think about all of the items. (And a lot of the time, we don’t keep the receipts…)
I’m telling you this: start now. Even if you didn’t keep the receipts from last year, start collecting. If you’re high tech, scan them in somewhere. Take a picture of your receipts and put them in a file on your computer. Heck, get a folder and put it next to your keys and put any receipts that can be included as medical/dental expenses into it. Find a system that works for you. But start now.
I AM NOT A TAX PROFESSIONAL. Oh, please. I have a BA degree and a MSc. degree, neither of which is in accounting. You know (hopefully) by now how much I do not like math. I use a bolus calculator for a reason. I have wonderful friends who are CPAs. Do not look to me for tax advice. Do not look to me as the shining pillar of how to do taxes. I am many things, but I am not a tax professional nor am I perfect. (I am The Perfect D, but…)
I’m not giving you the entire list of what are considered acceptable deductible medical expenses. If you want the whole list, you can get it from the IRS website.
Here are the ground rules for what you can deduct:
- You can only include the medical expenses you paid during the year and you can only use the expenses once on the return.
- If you got reimbursed for any medical expenses, you must reduce the expense by the amount you were reimbursed.
For instance: You paid a doctor $120 for an appointment in May of 2014, sent the receipt into your insurance, and they sent you a check for $100 in December of 2014. You can then only claim $20 for this 2014 expense on your taxes, because you paid only $20 to see the doctor.
What You Can Deduct If You Have Diabetes
Deductible diabetes medical expenses may include (but are not limited) to:
Your payments to your healthcare team: physicians, CDEs, nutritionists, dietitians, psychiatrists, psychologists, endocrinologists, nephrologists, podiatrists, cardiologists, physical therapists, chiropractors, and “non-traditional medical practitioners”, including acupuncture for smoking cessation, and massage therapists when used for a medical condition.
Your prescriptions/insulin. Anything that you have a prescription for, you can list as a medical expense. And… even if you don’t have a prescription for insulin, it’s still a medical expense that is covered. That includes your pump and all supplies. Your insulin pens and syringes and cartridges. If it helps you get the drug into your body, it’s a medical expense that can be deducted.
Your meter and blood glucose testing supplies. (These are diagnostic devices and therefore, covered. Same goes for your CGM and sensors. Ketone test strips (urine or blood).
Your eyeglasses or contact lenses. If you have contact lenses, you can deduct the cost of the enzyme cleaners and daily cleaning solutions. Don’t forget to include your eye exam, even if it was a refraction/non-dilated exam. That’s included.
Dental treatments at the dentist’s office, including cleanings and fillings. (You cannot expense floss, toothbrushes, or toothpaste.)
Your guide dog expenses, including grooming and food and vet fees.
Your lab fees. Your ambulance fees or ER fees or hospital stay. All of it is covered. They’ll send you receipts. You’ll weep at seeing how much they charge.
Your lodging for medical care (up to $50 per person per night) (meals not included), if:
- The lodging is primarily for and essential to medical care.
- The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital.
- The lodging is not lavish or extravagant under the circumstances.
- There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.
Your cost of special dietary considerations (i.e. celiac disease - and you must click on that link and read this post from one of my favorite bloggers) or costs for participation in a weight-loss program after an obesity diagnosis) when prescribed by a doctor. Don’t try to deduct health club dues. Nope.
Your admission/registration costs AND travel expenses for a chronically ill person or spouse or a parent of a chronically ill kid to attend a medical conference to learn about new medical treatments. (You can’t deduct meals or lodging while attending the conference.) Hello? Friends for Life? AADE or ADA? Ahem. Deductible medical expenses. Holla.
Your Electronic Health Records cost to keep all your data in one place. Also known as a “medical information plan” or a “personal electronic health record.”
Payments for transportation primarily for and essential to medical care that qualify as medical expenses, such as payments of the actual fare for a taxi, bus, train, ambulance, or for medical transportation by personal car, the amount of your actual out-of-pocket expenses such as for gas and oil, or the amount of the standard mileage rate for medical expenses, plus the cost of tolls and parking fees.
Some of your health insurance premiums. I’m not going to get into this one, as it’s a minefield of what you can and cannot deduct. You need to look at the IRS website on this particular subset.
What You Can’t Deduct
One of the things that I wish could be covered is hypoglycemia recovery supplies (i.e. glucose tabs, juice, etc.). I’m doing everything that I can to keep that cost to a minimum, but really… we all probably spend far too much on that, and it’s not reimbursable. (Not unless you have a prescription written by your doctor for “juice”…)
You can’t deduct the cost of the cell phone plans and minutes calling your insurance company to argue over what is covered and what isn’t.
You can’t medically deduct the cost of your Internet service plan for the time you spend getting peer to peer support online from the DOC.
You can’t deduct the over-the-counter salves and moisturizers to keep our pretty diabetic feet from cracking or drying out.
Hopefully I’ve triggered something in your brain that says: “I can deduct that?! Booya!” Start preparing now for the 2014 tax season. (I’m quite aware that U.S. taxes are not due until April 15th, but don’t wait until the 15th to think about all the items that you can add together for your medical expense deductions… you’ll get overwhelmed and you’ll inevitably miss something.)
Happy deduction hunting!