Medical and Dental Expenses

In theory, you can deduct the amount of medical and dental expenses you had during the year that were not reimbursed by insurance. You can also deduct the amount of health insurance premiums you paid out of pocket - that is, not including amounts paid by your employer, or paid with pre-tax dollars through withholding from your paycheck.

However, in reality, your medical and dental expense deduction is extremely limited because only the portion that exceeds 10 percent in 2013 (7.5 percent if the taxpayer or spouse is over age 65) of your adjusted gross income (as shown on Line 37 of your Form 1040) is deductible. For that reason, generally only those with severe, chronic or catastrophic medical problems or those who must pay for their own health insurance will benefit from this deduction.

The threshold for medical expenses was only 7.5 percent in 2012 but it increased to 10 percent in 2013. However, it remains at 7.5 percent in 2013 if the taxpayer or spouse is over age 65.

Save Money For self-employed people, 100 percent of health insurance premiums for themselves, their spouse, and dependents are deductible directly on the front of Form 1040 (Line 29), rather than on Schedule A. You're eligible to claim this deduction for any months that you were not covered or eligible to be covered under an employer's plan for yourself or your spouse. This is great news since self-employed people could only directly deduct a portion of their premiums in prior years.

For more details on the medical expense deduction:

• Be sure that you are deducting expenses for all the family members that you're entitled to.
• Consider our list of deductible expenses, to be sure you haven't missed any.
• Also consider our list of nondeductible expenses — you might be surprised at what the IRS does not allow you to deduct.