Do out of pocket medical expenses have to be paid in full to be itemized as a tax deduction for 2007 tax year?

Question

I have a high deductible and over $5000 in out of pocket medical expenses so far for 2007.

Answer 1

You can only deduct the actual amount that you paid in that year. If during the tax year you are filing for you paid $3000 of the $5000 for example, your deduction would be $3000. If you pay the other $2000 the next year, that would be a deduction for the next year.

You can only deduct medical expenses if you itemize, and then can only deduct the portion of the expenses that is greater than 7.5% of your adjusted gross income.

Answer 2

Only medical expenses you paid with after-tax dollars are deductible. The expenses do not have to be entirely paid off. The expenses could be for a prior year, so if you continue to pay your 2007 expenses in 2008, you can deduct those payments in 2008.

Since you have a high deductible policy, consider establishing a Health Savings Account. You will be able to deduct contributions to your HSA up to $2,850 ($5,650 for family), plus an additional $700 if you are age 50 or over. Then, you can use your HSA contributions to pay for your expenses tax-free.

If you have not established an HSA you can still do so and retroactively contribute based on the entire year. Any payments you make after establishing the HSA from your HSA contributions will be tax-free.

Answer 3

Of course not! You already got the tax break by using the HSA since that money was never taxed. If you use the HSA, you can't deduct the same expense since that would be double-dipping. You get a BETTER tax break with the HSA since you don't have to contend with the 7.5% limitation on medical expense deductions on Schedule A. And you get the tax break even if you don't itemize.

Answer 4

No, your bills do not have to be "paid in full" to deduct what you paid on your taxes. However you can only deduct what you actually paid, not what you were billed.

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Answer 5

You can only deduct what you PAID for qualifying medical expenses. Not what you've been billed.

Answer 6

You have to pay your medical expenses before you can deduct them. Payment can be cash or credit card.

Answer 7

Yes, they do have to be paid in full before the end of the year. And you can deduct only the amount of your expenses that exceeds 7.5% of your adjusted gross income. So if your AGI is $40,000, 7.5% of that is $3000, if your bills were $5000 you can only deduct the $2000.

Answer 8

The amount billed is not deductible, only the amount you actually pay can be used.

Answer 9

Yes, because if you carry the balance over into the next year, you have not technically paid the debt yet.