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Since last year I have spent sufficient amount of money on medical bills (greater than $1500) as a result of 20% that I am supposed to cover under my insurance. My questions are:

  1. What is the procedure to claim these medical tax returns and which forms are required?

  2. I do not have hard copies of the bills, but I can retrieve payments information made through credit card for the medical expenses. Would these credit card payment information count as a proof for tax return?

  3. Also, is co-pay counted as out-of-pocket?

Thanks.

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  • A warning on card or other electronic payments e.g. ACH: many US doctors and other medical providers operate for legal purposes as partnerships and LLCs, so the name on your card or bank statement may not be easily recognizable. For each expense handled under an insurance plan, even though you paid, the insurance company was required to send you an "explanation of benefits". In practice these so-called explanations rarely explain in the sense of making anything understandable, but they usually do accurately link dates and amounts to providers and claims. – dave_thompson_085 Dec 31 '15 at 14:33
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There is a tax advantage only for medical expenses exceeding 10% of your adjusted gross income (7.5% if over age 65). This limit means only a very few people can take advantage of the deduction.

  1. The expenses would be entered on Schedule A (itemized deductions) of form 1040.

  2. You don't have to send in the supporting documentation, but you have to keep it in your records to present if audited.

  3. Yes, a copay qualifies as an expense, but needs supporting documentation.

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  • Effective 2013 the floor changed to 10%, except for taxpayers 65 and older. – dave_thompson_085 Dec 31 '15 at 14:24
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In addition to the 10%/7.5% limitation mentioned in the answer by mgkrebbs (which means that very few people can take advantage of the deduction), itemized deductions reduce taxes only when the total of all the itemized deductions exceeds the standard deduction available to the taxpayer. People with mortgaged homes have a leg up on this because they can include the mortgage interest and property taxes on Schedule A whereas those who rent their living space cannot. In other words, not having sufficient other itemized deductions can make the really ill person with medical bills large enough to exceed the 10% limitation suffer the double whammy of not getting a tax reduction for any part of the huge medical expense.

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