Health-Related Deductions

[NN52825]

When responding to the part of the W-4  about the Health Savings Account Deduction, can you enter a deduction for Health Savings and Flexible Spending accounts too? How do you know if they have already been deducted?

When estimating medical and dental expenses, can you total all your expenses including premiums, deductibles, copays, and out-of-pocket expenses? What about both prescriptions and over-the-counter medication, tools and devices?

Thank you in advance. 

[Terri Lynn]

Regarding the W-4 and Health Savings/Flexible Spending Accounts:

You cannot directly enter a deduction for either a Health Savings Account (HSA) or Flexible Spending Account (FSA) contributions on the W-4. Both are generally pre-tax,  so they would not typically be listed as  deductions on the W-4 itself,  as this means they are usually handled by your employer's payroll system as a pre-tax reduction from your gross pay.

You can tell if they have already been deducted by checking your pay stubs.

**It is also important to note that If any FSA or HSA funds are used to pay for medical expenses, these same expenses cannot be included as itemized deductions.

Regarding Estimating Medical and Dental Expense:

Yes, when estimating medical and dental expenses for tax purposes (e.g., for itemized deductions), you can generally total all qualified expenses. This includes:

• Premiums (for medical and dental insurance, subject to certain limitations)
• Deductibles
• Copays
• Other out-of-pocket expenses for diagnosis, cure, mitigation, treatment, or prevention of disease.
• Both prescription medications and qualifying over-the-counter medications (if prescribed or for a specific medical condition and not for general health).
• Tools and devices (e.g., crutches, wheelchairs, eyeglasses, hearing aids) if primarily for medical care.

Useful Links:

• Form W4 and Take Home Pay  
• Understanding your withholding allowances  

Please feel free to reach backout with any additional questions or concerns you might have!

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[KatherineS63]

It is helpful to use www.irs.gov/W4App  to assist you with filling out your W4.  

You can also look at these links:

How to fill out a W4  Instructions on how to fill out a W4

W4 calculator  Use to help fill out a W4

Form W4  Actual W4.  Line 4c is where you would add extra withholdings from each check.

Once you have filled out the W-4, then in a few months use the links below to do a tax estimator.  This will tell you how much you might owe after making the changes.  You can do a tax estimator several times per year.  If you have changed your withholdings mid year, you will want to see that you keep owing less as the year goes on.

IRS Tax estimator This is a tax estimator that will time out so enter and print findings all at one sitting.

TaxCaster  This is another tax estimator that will time out so enter and print findings all at one sitting.

 For state withholdings, it is hard to find a tax estimator for each state but they will have a state withholdings form that you can fill out.  

For the medical expenses:  All your expenses including premiums, deductibles, copays, prescriptions, tools and devices have to be paid out of pocket (meaning not something that is paid with HSA money or part of a work benefit). 

Which medical expenses aren't tax deductible?

Any medical expenses you get reimbursed for, such as by your insurance or employer, can't be deducted. In addition, the IRS generally disallows expenses for cosmetic procedures. You typically can't deduct the cost of nonprescription drugs (except insulin) or other purchases for general health, such as toothpaste, health club dues, vitamins, diet food and nonprescription nicotine products. You also can't deduct medical expenses paid in a different year.

Please remember that you can only use medical expenses on Schedule A if it totals over 7.5% of your income.  For example, if your income is $10,000.  Then 7.5% would be $750.  If you spent $800 out of pocket on medical expenses then can use $50 on your Schedule A.  ($800-$750=$50).  Here is a copy of a Schedule A for you to look over:  https://www.irs.gov/pub/irs-pdf/f1040sa.pdf 

Katie S