Since medical bills are deductible only to the extent that they total more than 7.5 percent of your adjusted gross income, timing your payments may be the only way to garner a tax benefit from these costs. By early December, you should have a good idea whether you'll pass the 7.5 percent floor. If it's doubtful, try to hold off paying any medical bills or scheduling medical exams and procedures until the following year, when they might have some tax-saving power. On the other hand, if you are close to or already over the threshold, see what you can do to pump up the deduction.
One sure way, of course, is to pay any outstanding medical bills - including health insurance premiums - by December 31. If you charge expenses to a bank credit card or borrow money to pay the bills, you get the deduction for the current year when you pay the bill, regardless of when you repay the debt.
Taxpayers who know they'll get to deduct medical expenses should also consider scheduling, being billed for, and paying for elective medical and dental work before the end of the year. That locks in Uncle Sam's subsidy. The same goes if you need new glasses, contact lenses, dentures, a hearing aid, or modifications to a car to enable a handicapped person to drive.
Medical expenses you pay using your employer's cafeteria plan or flexible spending arrangement are not deductible. For more information on the plans and the benefits they provide, see Cafeteria Plans.
Return to Deductions
