ToddL99
Expert Alumni

Deductions & credits

You won't be able to claim a medical expense deduction for Section 125 health insurance plans; the cost of those premiums has already been deducted from your taxable income.  This approach is much more beneficial than claiming the premiums as a medical expense deduction, since those deductions are very restricted.

 

To deduct unreimbursed, out-of-pocket medical, dental, and vision costs on your federal return:

  • You must take the itemized deduction;
  • The expenses for you, your jointly-filing spouse, and your dependent(s) must exceed 7.5% of your AGI (adjusted gross income); and
  • Only the portion above and beyond 7.5% of your AGI is deductible.

What is SEC125 on W2:  SEC 125 is your employer's benefit plan. It is also known as a "cafeteria plan". Usually, what is reported there is your medical insurance premiums that are paid with pre-tax income. They are not taxed and are not included in your W-2 Box 1 wages so you can not deduct them as medical expenses.