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Tax Deductions on Medical Expenses: Why So Few Take Them

By Dan Caplinger - Updated Feb 15, 2017 at 11:39AM

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Medical expenses are listed as an itemized deduction, but few people claim them. Find out why here.

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 ( UNH 0.74% ), WellPoint ( ANTM -1.19% ), 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.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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UnitedHealth Group Incorporated Stock Quote
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