Tax Deductions for dental expenses

By Jay D. Edelman, CPA

An individual is entitled to an itemized deduction for medical and dental expenses paid during the tax year, to the extent the expenses exceed 7.5% of adjusted gross income.  If your medical and dental expenses do exceed 7.5% of adjusted gross income, only the portion of the expenses that exceed the threshold will be deductible.

Proper planning and timing can help to increase your potential deduction: For example, if you know you must undergo a series of medical and/or dental procedures, by planning them, and paying for them, in a single tax year, you may incur enough expenses in that tax year to generate a tax deduction. On the other hand, by splitting the procedures between two years, you may be under the 7.5% threshold in both years, thereby forsaking valuable deductions.

 Other planning opportunities may exist if your income fluctuates from year to year, or if you have some control your income. For example, can you delay a bonus from December 31 to January 1, keeping income lower in a year when you might have greater medical and dental expenses. The combination of lower income and higher medical expenses in a given year maximizes the tax deductibility of the expenses, saving you the greater amount of taxes.

 Medical expenses include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease. Other allowable expenses include such items as transportation to and from medical/dental appointments and the cost of eyeglasses. Medical and dental expenses paid on behalf of a spouse or dependent may also be included. Insurance premiums may also be included.

 Gift Giving And Your Medical/Dental Expenses

 If your parents directly pay your medical/dental expenses, any potential tax deduction may be lost: You cannot take the deduction if you do not actually pay the bills; your parents cannot take the deduction if you are not their dependent.

 A solution to this problem is for your parents to give you a monetary gift, and then you can pay the expenses yourself. Then, since your income level is lower than your parents are, and thus the deduction threshold is lower, you may be able to deduct a portion of the medical/dental expenses. The gift itself would not be taxed as long as you have not received total gifts in a single year from the donor in excess of $10,000.

 Gift giving along with proper planning can help convert your medical and dental expenses into tax savings.