Allowable IRS Medical Expenses Tax Deduction Guidelines 2009 2010

You can deduct any expense you pay for the prevention, diagnosis, or medical treatment of physical or mental illness, and any amounts you pay to treat or modify any part or function of the body for health, but not for cosmetic purposes.

(So you can deduct the cost of Lasik eye surgery to correct your vision, but not the BOTOX® injections to smooth the wrinkles around your eyes.) You can also deduct the cost of transportation to the locations where you can receive this kind of medical care, your health insurance premiums, and your costs for prescription drugs and insulin.

Medical expenses are only deductible if you itemize and only if they exceed 7.5 percent of your adjusted gross income (10% if you are subject to the Alternative Minimum Tax). You can only deduct the medical and dental expenses above that floor.

Example: Emma's adjusted gross income was $100,000, and she spent $8,000 on medical expenses. Because her expenses equal at least 7.5 percent of her adjusted gross income, she can take the deduction for the amount above $7,500. Her deduction, then, is for $500. Read More