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Eligible Expenses, FAQ

Aren’t my Medical Expenses tax-deductible now?

No. This is a common misconception. Medical and Health care expenses are never tax-deductible on personal taxes, but instead are eligible for a tax credit only. If your medical claims are less than 3% of your taxable income in a year, you get no credit whatsoever. Now you can choose any 12 month period ending in the tax year in an effort to find a window that reaches the 3%, but by doing so you will cut out other months that do have legitimate expenses that can now not be claimed.

Assuming you make the 3% hurdle, what you will now receive is a tax credit, not a tax deduction. Tax credits are paid out at the lowest tax bracket level regardless of your income and how much tax you were required to pay on that money when you earned it.

In practical application, we find many people never get the benefit of the tax credit even when they should have been eligible as their income doesn’t let them claim, or they don’t have a system to keep, all their receipts and shuffle their 12 month claiming windows to maximize the credit they might receive. Also, who really wants their tax preparer to see all their medical and prescription receipts?

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