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(Medical expenses, 1040)Reaching out-of-pocket maximum and including amount in medical expenses.

Suppose through work you've reached your maximum out of pocket payment insurance maximum, say, $2000, for the year, at which point the insurance company pays any amount over the two grand.

Suppose you paid Doctor One $300 out-of-pocket during the year for your share not covered by insurance and Doctor Two $500 out of pocket during the year for your share not covered by insurance.

Are the $2000 plus $300 plus $500 all allowable medical deductions (subject, of course) to the 7.5% of AGI limit? It just doesn't seem right. That $2,000 seems like a large amount. Aren't the $300+$500 already included in the $2000?

So, in determining my medical expenses for 2022, I should ignore, in my example, the $2000, and use the $800? (There is actually a lot more than this.)

What if I just put the $2000 as my 2022 out-of-pocket medical expenses? Would this cause a problem for me if I am audited?

Thank you.

Reply to
Patrick Cogan
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You add up any amounts you actually paid out-of-pocket for medical (normally via cash, check or credit card), subject to the 7.5% AGI limitation and less any payments the insurance company paid back to you. The rules of the insurance company governing what they cover and what they don't and what their out of pocket max, etc. are totally irrelevant. The IRS only cares about how much net money you actually paid out of pocket for medical expenses. And don't forget to include the premiums you paid for that health insurance policy, and remember too to include dental and vision care expenses.

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Reply to
Rick

But you can't claim premiums that were deducted pre-tax from your pay. They are already excluded from your taxable income.

Bob Sandler

Reply to
Bob Sandler

You seem to be using "out-of-pocket" in two different ways. Possibly you mean that the $500 and $300 were not allowable expenses as far as your insurance is concerned, so they did not count as part of your maximum out-of-pocket as computed by the insurance company?

But as Rick says, that doesn't matter. All the law cares about is how much you paid for out of your own money, less any reimbursement from the insurance company to you. Whether it's called copay, coinsurance, or anything else doesn't matter, and it doesn't matter whether your insurance considers it a covered medical expense. All that matters is that you paid it, and that it's for an allowable item according to the IRS.

Rick and Bob have already listed some types of medical expense, but I think neither one mentioned mileage and medical equipment, which can really add up. However, rather than our lists, all of which are incomplete, why not get them from the horse's mouth:

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And as Rick has already mentioned, after you list all your medical expenses, you have to subtract 7.5% of your adjusted gross income. But that will be pretty obvious as you fill out Schedule A, or if you're using tax-prep software it will handle the 7.5% business for you.

Reply to
Stan Brown

That's an excellent point. I'm forgetting that most people get health insurance through employment and most employers nowadays treat that as a pre-tax deduction.

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Reply to
Rick

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