Yes, you can deduct unreimbursed, out-of-pocket medical, dental, and vision costs on your federal return, however, if you're making monthly payments to the hospital for last year's expenses, you can only deduct what you paid so far, not the total bill.
In order to deduct medical expenses:
- 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.
For example, if your AGI happens to be $100,000, you can deduct the portion of your expenses exceeding 7.5% of your AGI ($7,500). If your total expenses for the year came in at $6,000, you wouldn't be able to deduct any of it, but if they were $10,000 you could deduct the portion over and beyond $7,500, which would be $2,500 – provided you're itemizing of course.
That said, go ahead and enter all of your out-of-pocket expenses, even if you don't think they qualify as a deduction. Some states will let you deduct them on your state return even if you couldn't deduct them on your federal return. We'll figure that out for you.
Medical, dental, and vision expenses are reported on Schedule A and entered in the Deductions & Credits section.
- With your return open, search for Schedule A and then select the Jump to link in the search results.
- Answer Yes on the Did you spend more than $3,000 on medical expenses in 2020? screen.
- Enter your medical expenses, starting with prescriptions, on the following screens.
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