Medical Deduction

[tom_hagen_jr]

So i'm a little confused with the medical deductions. It states that if you pay more than 7.5% of your annual income of medical you will get the remaining money back. I just went through and didn't get a deduction despite paying well over the 7.5% in medical expenses. Is there a different thing holding back the funds? I used TurboTax self and have been for years, this year and last year we didn't receive money back for the medical.

[Bsch4477]

You don’t get the money back. The amount greater than 7.5 percent of your AGI can be used as an itemized deduction. That’s only a benefit for you if your total itemized deductions is greater than your standard deduction. 

[rjs]

You don't "get the remaining money back." You can claim a deduction for the amount over 7.5% of your Adjusted Gross Income (AGI). It's not a dollar-for-dollar reduction of your tax. The deduction is subtracted from your taxable income, not from your tax.

Here's an example. Suppose your AGI is $60,000 and your unreimbursed medical expenses are $8,000. 7.5% of your $60,000 AGI is $4,500. So your deduction is $8,000 minus $4,500, which is $3,500. If you are in the 22% tax bracket, the deduction would reduce your tax (or increase your refund) by 22% of $3,500, which is $770.

HOWEVER, the deduction for medical expenses is an itemized deduction. It will not reduce your tax at all unless your total itemized deductions are more than your standard deduction. If you are filing as single, for 2024 your standard deduction is $14,600. So you would need a lot of other itemized deductions for the medical expenses to make any difference in your tax. For any other filing status the standard deduction is even higher.