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You'll usually claim this deduction if you had large, unreimbursed medical expenses. To deduct medical and dental expenses on your return, both of these must apply:

• You itemize deductions on Schedule A.
• Your expenses are more than 7.5% of your adjusted gross income (AGI).

Starting with tax year 2013, the threshold will increase to 10% of AGI.

What Can Be Deducted?

The list of qualifying medical expenses is extensive. For any medical condition, it includes the cost of:

• Diagnosis
• Cure
• Mitigation
• Treatment
• Prevention
• Items needed for the above purposes, including:
  
  • Equipment
  • Supplies
  • Diagnostic devices

To be deductible, medical care expenses must be mainly to alleviate or prevent a physical or mental defect or illness. You can't deduct expenses that are simply beneficial to general health, like vitamins or a vacation.

You can deduct these medical expenses:

• Cost of medical care from these types of practitioners:
  • Acupuncturists
  • Chiropractors
  • Dentists
  • Eye doctors
  • Medical doctors
  • Occupational therapists
  • Osteopathic doctors
  • Physical therapists
  • Podiatrists
  • Psychiatrists
  • Psychoanalysts giving medical care
  • Psychologists
  • Other qualified medical practitioners
• Transportation costs to and from medical care. If you drive your own car, the deduction is 19 cents per mile for Jan 1 to June 30 2011 23.5 cents per mile for July 1 to Dec 31 2011.
• Prescription medicines
• Amounts paid for qualified long-term care services
• Limited amounts paid for any qualified long-term care insurance contracts
• Medical insurance premiums. However, you can't deduct pre-tax salary contributions you make to an employer-sponsored health insurance plan.
• Amounts you pay – if not covered by Social Security – for:
  
  • Medicare B supplemental insurance
  • Medicare D insurance
  • Medicare A premiums

You usually can't deduct premiums you pay for certain types of policies if the benefits aren't tied to the actual cost of the medical care you received. These types of policies include:

• Policy that pays you a certain amount (Ex: policy that pays you $200 a day while hospitalized)
• Policy that pays you for lost earnings
• Policy that pays a flat amount for the loss of a limb or eyesight

Contributions you make to a health savings account (HSA) aren't medical expenses, but they're an adjustment to income. So, you can deduct 100% of your qualifying HSA contributions even if you don't itemize deductions.

To learn more see IRS Form 8889 instructions

The required contributions you make to state disability-benefit funds aren't considered medical expenses limited by the 7.5% rule if you're a resident of:

• California
• New Jersey
• New York
• Rhode Island
• Washington

Instead, include these payments as part of your state tax deduction on Schedule A.

Whose Medical Expenses Can You Include On Your Return?

You can deduct medical expenses for anyone who qualifies as your spouse or dependent at the time the service was provided or at the time the bill was paid.

If you're divorced, you can deduct as a medical expense any qualifying bills you pay for your children – even if your former spouse claims them as dependents.

You can also deduct medical expenses you pay for any other person who:

• Qualifies as your dependent
• Would qualify as your dependent except that person files a joint return or has a gross income that's more than $3,650

When Do Payments Have To Be Made To Be Deductible?

You can include only the medical and dental expenses you paid in the current tax year, regardless of when the services were provided.

The payment dates for expenses include:

• Pay by check – day you mail or deliver the check
• Online or phone payment – date reported on the statement showing when you made the payment
• Credit card payment – date the charge is made, not the date you pay the credit card bill

What Are Some Expenses Not Considered Deductible Medical Expenses?

Nondeductible expenses include:

• Cosmetic surgery not related to a congenital abnormality, an accident, or a disease
• Medicare tax on wages and tips paid as part of the self-employment tax or household employment taxes
• Nursing care for a healthy baby
• Usually, drugs not approved by the FDA
• Funeral, burial, or cremation costs

To learn more see IRS Publication 502: Medical and Dental Expenses.