Prepaid Medical Expense

[tasweeney]

I am in the process of extensive dental procedures that will extend into 2021.  I have a documented fixed price for the work.  I've paid a portion this year.  Can I pay the balance this year and take the full deduction for 2021?.  Work should be completed prior to April 2022.   

[DoninGA]

You can only enter on the 2021 tax return the amount of medical expenses you actually paid in 2021.  When you file your 2022 tax return in 2023 you can then enter the amount of medical expenses you paid in 2022.

Medical expenses are entered on Schedule A as an itemized deduction.  Only the amount of medical expenses which exceeds 7.5% of your Adjusted Gross Income (AGI) can be entered on Schedule A as a medical expense.

[tasweeney]

Thank you.  My post was not clear.  I want to pay in 2021 for dental work that is currently underway but will not complete until next tax year, 2022.  I have paid a portion already in 2021.  If I pay the balance in 2021, can I take the medical deduction (as per IRS 502) in 2021?  The procedure will be complete in March 2022.  Provider is willing to accept payment in full in 2021.  Advantage is not having to meet the 7.5% threshold again next year.  

Thanks again.  

[DoninGA · Accepted solution]

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@tasweeney wrote:

Thank you.  My post was not clear.  I want to pay in 2021 for dental work that is currently underway but will not complete until next tax year, 2022.  I have paid a portion already in 2021.  If I pay the balance in 2021, can I take the medical deduction (as per IRS 502) in 2021?  The procedure will be complete in March 2022.  Provider is willing to accept payment in full in 2021.  Advantage is not having to meet the 7.5% threshold again next year.  

Thanks again.  

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Yes, if you pay the full amount in 2021 then that amount can be deducted on the 2021 tax return as an itemized deduction.