Writing off medical bills after car accident

[kevin19801980]

Very complex question here.

I was in a car accident in april 2022.  The guy who hit me didnt have insurance.  I had uninsured motorist insurance, but I still had to pay 9000 out of pocket for damage to my car and towing etc.  I also had 9000 in medical bills.  I am getting a settlement from the personal injury component of my uninsured motorist insurance.  My question is... Can I write those bills off on my taxes?  Together those two bills are greater then the standard deduction for w2  employees. So could I write them off on a schedule A?  Also the bills were issued this year, but I'm not sure if it is better to pay them off in 2023 instead of 2022. Or if that even matters for a schedule A.  I do have a w2 job but I did do alot of door dash this year so I am also getting a 1099 for 2022.  I also intend to keep doing door dash next year as well.

[xmasbaby0]

If you itemize deductions you can enter the amount of the medical bills that YOU paid out of pocket---not the amounts covered by insurance.   However, it is very hard to use the medical expense deduction since you have to meet two difficult thresholds.   

MEDICAL EXPENSES

The medical expense deduction has to meet a rather large threshold before it can affect your return. The amount of medical (including dental, vision, etc.)  expenses that will count toward itemization is the amount that is OVER 7.5% of your adjusted gross income. You should only enter the amount that you paid in 2022—do not include any amounts that were covered by insurance or that are still outstanding.  Of course, your medical expenses plus your other itemized deductions still have to exceed your standard deduction before you will see a difference in your tax due or refund.

To enter your medical expenses go to Federal>Deductions and Credits>Medical>Medical Expenses

2022 STANDARD DEDUCTION AMOUNTS

SINGLE $12,950  (65 or older + $1750)

MARRIED FILING SEPARATELY $12,950  (65 or older + $1750)

MARRIED FILING JOINTLY $25,900  (65 or older + $1400 per spouse)

HEAD OF HOUSEHOLD  $19,400  (65 or older +$1750)

Legally Blind + $1750

AND  Sorry but the damage to your car is not deductible.  The tax laws that changed for 2018 and beyond eliminated casualty losses as a federal deduction unless your loss occurred as the result of being in a federal disaster area.

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-re...

[Opus 17]

Damage to your car is not tax deductible.

Amounts that you pay out of pocket for medical expenses are tax deductible.  The expense is only deductible in the year you actually pay the provider, regardless of when you prefer to deduct it. For example, if you have an arrangement to pay the provider overtime, you can only deduct in 2022 the amount you actually paid in 2022. However, if you paid the provider in full using a credit card and or paying the credit card off overtime, you can deduct the entire amount in 2022 since the provider was paid in full.  

Also note that if you deduct your medical expenses and are then reimbursed, the reimbursement will be taxable to the extent that it is a reimbursement of a previous tax deduction.  This is because you can’t claim a tax free reimbursement for some thing that was a tax deduction. This will follow the tax benefit rule.  For example. Suppose your taxable income is $100,000. Because of the 7.5% rule, if you list $9000 of medical expenses, you will only get a tax deduction of $1500. If you are later reimbursed by insurance, the full $9000, $1500 of that reimbursement will be taxable in the year the reimbursement occurs. 

[kevin19801980]

Thank you for the reply,  regarding the medical bills,  they were not covered by insurance.  They are going to be paid out of the personal injury portion of my uninsured motorist settlement.  Does that mean I could still try and deduct them on a schedule A.  

[xmasbaby0]

No, you cannot deduct the medical expenses for which your uninsured motorist coverage reimburses you.   The only medical expenses you can use are any that you pay yourself out of pocket and for which you are not reimbursed, covered by insurance, etc.   And then you can only use the ones that are 7.5% above your adjusted gross income.   And, if your itemized deductions including the medical expenses that are deductible, plus any other deductions such as mortgage interest, etc. do not exceed your standard deduction, they have no effect at all on your refund or tax due.

[Opus 17]

@kevin19801980 

As I stated above, you can deduct the expenses now because you paid them, but if you are later reimbursed, that becomes taxable income. You can’t have two tax-free benefits on the same medical expense. If you take the deduction on the expense, then the reimbursement from the insurance company can’t be tax-free and you must add it to your taxable income and pay taxes on it.