Tax Deductions on Medical Expenses: Why So Few Take Them

In the heart of tax time, everyone's looking for ways to cut their taxes. Yet even though medical deductions are available to reduce your tax bill, relatively few taxpayers take advantage of them. Why?

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, explains why the medical expense deduction is so hard to claim. First, Dan notes that you have to itemize in order to get any benefit from the deduction, as those taking the standard deduction get no extra benefit. Moreover, Dan goes on to point out that you're only allowed to deduct amounts above 10% of your gross income. That's a huge hurdle for most working families, and Dan reminds viewers that amounts that UnitedHealth Group (NYSE: UNH  ) , WellPoint (NYSE: ANTM  ) , and other health-insurance companies reimburse you on medical expenses isn't eligible for the deduction. Dan concludes that retirees are the most likely to take the deduction, yet their income is usually so low that the deduction does them little good in producing tax savings.

Get deductions you can use
People want deductions now more than ever, because tax increases that took effect at the beginning of 2013 affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "How You Can Fight Back Against Higher Taxes," The Motley Fool's tax experts run through what to watch out for in doing your tax planning this year. With its concrete advice on how to cut taxes for decades to come, you won't want to miss out. Click here to get your copy today -- it's absolutely free.

Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 23, 2014, at 4:27 PM, jake2014 wrote:

    While it's difficult to get the deduction on the Federal return, AZ allows the full amount of reimbursed medical expenses on the AZ return. This allows many of my clients to itemize on their AZ return even though they don't itemize on the Federal return.

  • Report this Comment On March 24, 2014, at 1:30 AM, marofish8 wrote:

    My H&R Block program says if "both you and your spouse was born before January 2, 1949", the deduction starts after the first 7.5% of income.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2886242, ~/Articles/ArticleHandler.aspx, 9/4/2015 3:01:30 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

Today's Market

updated Moments ago Sponsored by:
DOW 16,055.46 -319.30 -1.95%
S&P 500 1,917.23 -33.90 -1.74%
NASD 4,667.51 -65.98 -1.39%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 2:34 PM
ANTM $141.38 Down -1.57 -1.10%
Anthem CAPS Rating: ****
UNH $111.63 Down -2.36 -2.07%
UnitedHealth Group CAPS Rating: *****