2012 Publication 502 20502 IRS

User Manual: 20502

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Department of the Treasury
Internal Revenue Service
Publication 502
Cat. No. 15002Q
Medical and
Dental
Expenses
(Including the Health
Coverage Tax Credit)
For use in preparing
2012 Returns
Get forms and other Information
faster and easier by:
Internet IRS.gov
Contents
What's New .............................. 1
Reminders ............................... 1
Introduction .............................. 2
What Are Medical Expenses? ................. 2
What Expenses Can You Include This Year? ..... 2
How Much of the Expenses Can You
Deduct? .............................. 3
Whose Medical Expenses Can You Include? ..... 3
What Medical Expenses Are Includible? ........ 5
What Expenses Are Not Includible? ........... 15
How Do You Treat Reimbursements? ......... 17
How Do You Figure and Report the Deduction
on Your Tax Return? ................... 21
Sale of Medical Equipment or Property ........ 22
Damages for Personal Injuries ............... 24
Impairment-Related Work Expenses .......... 25
Health Insurance Costs for Self-Employed
Persons ............................. 25
COBRA Premium Assistance ................ 26
Health Coverage Tax Credit ................. 27
How To Get Tax Help ...................... 30
Index .................................. 33
What's New
Standard mileage rate. The standard mileage rate al-
lowed for operating expenses for a car when you use it for
medical reasons is 23 cents per mile. See Transportation
under What Medical Expenses Are Includible.
Reminders
Future developments. For the latest information about
developments related to Publication 502, such as legisla-
tion enacted after it was published, go to www.irs.gov/
pub502.
Photographs of missing children. The Internal Reve-
nue Service is a proud partner with the National Center for
Missing and Exploited Children. Photographs of missing
children selected by the Center may appear in this publi-
cation on pages that would otherwise be blank. You can
help bring these children home by looking at the photo-
graphs and calling 1-800-THE-LOST (1-800-843-5678) if
you recognize a child.
Dec 10, 2012
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Introduction
This publication explains the itemized deduction for medi-
cal and dental expenses that you claim on Schedule A
(Form 1040). It discusses what expenses, and whose ex-
penses, you can and cannot include in figuring the deduc-
tion. It explains how to treat reimbursements and how to
figure the deduction. It also tells you how to report the de-
duction on your tax return and what to do if you sell medi-
cal property or receive damages for a personal injury.
Medical expenses include dental expenses, and in this
publication the term “medical expenses” is often used to
refer to medical and dental expenses.
You can deduct on Schedule A (Form 1040) only the
part of your medical and dental expenses that is more
than 7.5% of your adjusted gross income (AGI). If your
medical and dental expenses are not more than 7.5% of
your AGI, you cannot claim a deduction.
This publication also explains how to treat impair-
ment-related work expenses, health insurance premiums
if you are self-employed, and the health coverage tax
credit that is available to certain individuals.
Pub. 502 covers many common medical expenses but
not every possible medical expense. If you cannot find the
expense you are looking for, refer to the definition of medi-
cal expenses under What Are Medical Expenses.
See How To Get Tax Help near the end of this publica-
tion for information about getting publications and forms.
Comments and suggestions. We welcome your com-
ments about this publication and your suggestions for fu-
ture editions.
You can write to us at the following address:
Internal Revenue Service
Individual and Specialty Forms and Publications
Branch
SE:W:CAR:MP:T:I
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
We respond to many letters by telephone. Therefore, it
would be helpful if you would include your daytime phone
number, including the area code, in your correspondence.
You can email us at taxforms@irs.gov. Please put
“Publications Comment” on the subject line. You can also
send us comments from www.irs.gov/formspubs/. Select
“Comment on Tax Forms and Publications” under “More
Information.”
Although we cannot respond individually to each com-
ment received, we do appreciate your feedback and will
consider your comments as we revise our tax products.
Ordering forms and publications. Visit www.irs.gov/
formspubs/ to download forms and publications, call
1-800-TAX-FORM (1-800-829-3676), or write to the ad-
dress below and receive a response within 10 days after
your request is received.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613
Tax questions. If you have a tax question, check the
information available on IRS.gov or call 1-800-829-1040.
We cannot answer tax questions sent to either of the
above addresses.
Useful Items
You may want to see:
Publication
Health Savings Accounts and Other
Tax-Favored Health Plans
Forms (and Instructions)
U.S. Individual Income Tax Return
Itemized Deductions
Health Coverage Tax Credit
What Are Medical Expenses?
Medical expenses are the costs of diagnosis, cure, mitiga-
tion, treatment, or prevention of disease, and the costs for
treatments affecting any part or function of the body.
These expenses include payments for legal medical serv-
ices rendered by physicians, surgeons, dentists, and
other medical practitioners. They include the costs of
equipment, supplies, and diagnostic devices needed for
these purposes.
Medical care expenses must be primarily to alleviate or
prevent a physical or mental defect or illness. They do not
include expenses that are merely beneficial to general
health, such as vitamins or a vacation.
Medical expenses include the premiums you pay for in-
surance that covers the expenses of medical care, and
the amounts you pay for transportation to get medical
care. Medical expenses also include amounts paid for
qualified long-term care services and limited amounts
paid for any qualified long-term care insurance contract.
What Expenses Can You
Include This Year?
You can include only the medical and dental expenses
you paid this year, regardless of when the services were
provided. (But see Decedent under Whose Medical Ex
penses Can You Include, for an exception.) If you pay
medical expenses by check, the day you mail or deliver
the check generally is the date of payment. If you use a
“pay-by-phone” or “online” account to pay your medical
expenses, the date reported on the statement of the finan-
cial institution showing when payment was made is the
date of payment. If you use a credit card, include medical
969
1040
Schedule A (Form 1040)
8885
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expenses you charge to your credit card in the year the
charge is made, not when you actually pay the amount
charged.
If you did not claim a medical or dental expense that
would have been deductible in an earlier year, you can file
Form 1040X, Amended U.S. Individual Income Tax Re-
turn, for the year in which you overlooked the expense. Do
not claim the expense on this year's return. Generally, an
amended return must be filed within 3 years from the date
the original return was filed or within 2 years from the time
the tax was paid, whichever is later.
You cannot include medical expenses that were paid
by insurance companies or other sources. This is true
whether the payments were made directly to you, to the
patient, or to the provider of the medical services.
Separate returns. If you and your spouse live in a non-
community property state and file separate returns, each
of you can include only the medical expenses each ac-
tually paid. Any medical expenses paid out of a joint
checking account in which you and your spouse have the
same interest are considered to have been paid equally
by each of you, unless you can show otherwise.
Community property states. If you and your spouse
live in a community property state and file separate re-
turns or are registered domestic partners in Nevada,
Washington, or California (or a person in California who is
married to a person of the same sex), any medical expen-
ses paid out of community funds are divided equally. Gen-
erally, each of you should include half the expenses. If
medical expenses are paid out of the separate funds of
one individual, only the individual who paid the medical
expenses can include them. If you live in a community
property state and are not filing a joint return, see Publica-
tion 555, Community Property.
How Much of the Expenses
Can You Deduct?
You can deduct on Schedule A (Form 1040) only the
amount of your medical and dental expenses that is more
than 7.5% of your AGI (Form 1040, line 38).
In this publication, the term “7.5% limit” is used to refer
to 7.5% of your AGI. The phrase “subject to the 7.5% limit”
is also used. This phrase means that you must subtract
7.5% (.075) of your AGI from your medical expenses to
figure your medical expense deduction.
Example. Your AGI is $40,000, 7.5% of which is
$3,000. You paid medical expenses of $2,500. You can-
not deduct any of your medical expenses because they
are not more than 7.5% of your AGI.
Whose Medical Expenses
Can You Include?
You can generally include medical expenses you pay for
yourself, as well as those you pay for someone who was
your spouse or your dependent either when the services
were provided or when you paid for them. There are differ-
ent rules for decedents and for individuals who are the
subject of multiple support agreements. See Support
claimed under a multiple support agreement, later under
Qualifying Person.
Yourself
You can include medical expenses that you paid for your-
self.
Spouse
You can include medical expenses you paid for your
spouse. To include these expenses, you must have been
married either at the time your spouse received the medi-
cal services or at the time you paid the medical expenses.
Example 1. Mary received medical treatment before
she married Bill. Bill paid for the treatment after they mar-
ried. Bill can include these expenses in figuring his medi-
cal expense deduction even if Bill and Mary file separate
returns.
If Mary had paid the expenses, Bill could not include
Mary's expenses in his separate return. Mary would in-
clude the amounts she paid during the year in her sepa-
rate return. If they filed a joint return, the medical expen-
ses both paid during the year would be used to figure their
medical expense deduction.
Example 2. This year, John paid medical expenses for
his wife Louise, who died last year. John married Belle
this year and they file a joint return. Because John was
married to Louise when she received the medical serv-
ices, he can include those expenses in figuring his medi-
cal expense deduction for this year.
Dependent
You can include medical expenses you paid for your de-
pendent. For you to include these expenses, the person
must have been your dependent either at the time the
medical services were provided or at the time you paid the
expenses. A person generally qualifies as your dependent
for purposes of the medical expense deduction if both of
the following requirements are met.
1. The person was a Qualifying Child (defined later) or a
Qualifying Relative (defined later), and
2. The person was a U.S. citizen or national or a resident
of the United States, Canada, or Mexico. If your quali-
fying child was adopted, see Exception for adopted
child, later.
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You can include medical expenses you paid for an individ-
ual that would have been your dependent except that:
1. He or she received gross income of $3,800 or more in
2012,
2. He or she filed a joint return for 2012, or
3. You, or your spouse if filing jointly, could be claimed
as a dependent on someone else's 2012 return.
Exception for adopted child. If you are a U.S. citizen or
national and your adopted child lived with you as a mem-
ber of your household for 2012, that child does not have to
be a U.S. citizen or national, or a resident of the United
States, Canada, or Mexico.
Qualifying Child
A qualifying child is a child who:
1. Is your son, daughter, stepchild, foster child, brother,
sister, stepbrother, stepsister, half brother, half sister,
or a descendant of any of them (for example, your
grandchild, niece, or nephew),
2. Was:
a. Under age 19 at the end of 2012 and younger than
you (or your spouse, if filing jointly),
b. Under age 24 at the end of 2012, a full-time stu-
dent, and younger than you (or your spouse, if fil-
ing jointly), or
c. Any age and permanently and totally disabled,
3. Lived with you for more than half of 2012,
4. Did not provide over half of his or her own support for
2012, and
5. Did not file a joint return, other than to claim a refund.
Adopted child. A legally adopted child is treated as your
own child. This child includes a child lawfully placed with
you for legal adoption.
You can include medical expenses that you paid for a
child before adoption if the child qualified as your depend-
ent when the medical services were provided or when the
expenses were paid.
If you pay back an adoption agency or other persons
for medical expenses they paid under an agreement with
you, you are treated as having paid those expenses provi-
ded you clearly substantiate that the payment is directly
attributable to the medical care of the child.
But if you pay the agency or other person for medical
care that was provided and paid for before adoption nego-
tiations began, you cannot include them as medical ex-
penses.
You may be able to take a credit for other expen
ses related to an adoption. See the Instructions
for Form 8839, Qualified Adoption Expenses, for
more information.
Child of divorced or separated parents. For purposes
of the medical and dental expenses deduction, a child of
TIP
divorced or separated parents can be treated as a de-
pendent of both parents. Each parent can include the
medical expenses he or she pays for the child, even if the
other parent claims the child's dependency exemption, if:
1. The child is in the custody of one or both parents for
more than half the year,
2. The child receives over half of his or her support dur-
ing the year from his or her parents, and
3. The child's parents:
a. Are divorced or legally separated under a decree
of divorce or separate maintenance,
b. Are separated under a written separation agree-
ment, or
c. Live apart at all times during the last 6 months of
the year.
This does not apply if the child's exemption is being
claimed under a multiple support agreement (discussed
later).
Qualifying Relative
A qualifying relative is a person:
1. Who is your:
a. Son, daughter, stepchild, or foster child, or a de-
scendant of any of them (for example, your grand-
child),
b. Brother, sister, half brother, half sister, or a son or
daughter of any of them,
c. Father, mother, or an ancestor or sibling of either
of them (for example, your grandmother, grandfa-
ther, aunt, or uncle),
d. Stepbrother, stepsister, stepfather, stepmother,
son-in-law, daughter-in-law, father-in-law,
mother-in-law, brother-in-law, or sister-in-law, or
e. Any other person (other than your spouse) who
lived with you all year as a member of your house-
hold if your relationship did not violate local law,
2. Who was not a qualifying child (see Qualifying Child,
earlier) of any taxpayer for 2012, and
3. For whom you provided over half of the support in
2012. But see Child of divorced or separated parents,
earlier, Support claimed under a multiple support
agreement, next, and Kidnapped child under Qualify
ing Relative in Publication 501, Exemptions, Standard
Deduction, and Filing Information.
Support claimed under a multiple support agree-
ment. If you are considered to have provided more than
half of a qualifying relative's support under a multiple sup-
port agreement, you can include medical expenses you
pay for that person. A multiple support agreement is used
when two or more people provide more than half of a per-
son's support, but no one alone provides more than half.
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Any medical expenses paid by others who joined you in
the agreement cannot be included as medical expenses
by anyone. However, you can include the entire unreim-
bursed amount you paid for medical expenses.
Example. You and your three brothers each provide
one-fourth of your mother's total support. Under a multiple
support agreement, you treat your mother as your de-
pendent. You paid all of her medical expenses. Your
brothers repaid you for three-fourths of these expenses. In
figuring your medical expense deduction, you can include
only one-fourth of your mother's medical expenses. Your
brothers cannot include any part of the expenses. How-
ever, if you and your brothers share the nonmedical sup-
port items and you separately pay all of your mother's
medical expenses, you can include the unreimbursed
amount you paid for her medical expenses in your medi-
cal expenses.
Decedent
Medical expenses paid before death by the decedent are
included in figuring any deduction for medical and dental
expenses on the decedent's final income tax return. This
includes expenses for the decedent's spouse and de-
pendents as well as for the decedent.
The survivor or personal representative of a decedent
can choose to treat certain expenses paid by the dece-
dent's estate for the decedent's medical care as paid by
the decedent at the time the medical services were provi-
ded. The expenses must be paid within the 1-year period
beginning with the day after the date of death. If you are
the survivor or personal representative making this
choice, you must attach a statement to the decedent's
Form 1040 (or the decedent's amended return, Form
1040X) saying that the expenses have not been and will
not be claimed on the estate tax return.
Qualified medical expenses paid before death by
the decedent are not deductible if paid with a
taxfree distribution from any Archer MSA, Medi
care Advantage MSA, or health savings account.
What if the decedent's return had been filed and the
medical expenses were not included? Form 1040X
can be filed for the year or years the expenses are treated
as paid, unless the period for filing an amended return for
that year has passed. Generally, an amended return must
be filed within 3 years of the date the original return was
filed, or within 2 years from the time the tax was paid,
whichever date is later.
Example. John properly filed his 2011 income tax re-
turn. He died in 2012 with unpaid medical expenses of
$1,500 from 2011 and $1,800 in 2012. If the expenses are
paid within the 1-year period, his survivor or personal rep-
resentative can file an amended return for 2011 claiming a
deduction based on the $1,500 medical expenses. The
$1,800 of medical expenses from 2012 can be included
on the decedent's final return for 2012.
CAUTION
!
What if you pay medical expenses of a deceased
spouse or dependent? If you paid medical expenses for
your deceased spouse or dependent, include them as
medical expenses on your Form 1040 in the year paid,
whether they are paid before or after the decedent's
death. The expenses can be included if the person was
your spouse or dependent either at the time the medical
services were provided or at the time you paid the expen-
ses.
What Medical Expenses Are
Includible?
Following is a list of items that you can include in figuring
your medical expense deduction. The items are listed in
alphabetical order.
This list does not include all possible medical expen-
ses. To determine if an expense not listed can be included
in figuring your medical expense deduction, see What Are
Medical Expenses, earlier.
Abortion
You can include in medical expenses the amount you pay
for a legal abortion.
Acupuncture
You can include in medical expenses the amount you pay
for acupuncture.
Alcoholism
You can include in medical expenses amounts you pay for
an inpatient's treatment at a therapeutic center for alcohol
addiction. This includes meals and lodging provided by
the center during treatment.
You can also include in medical expenses amounts you
pay for transportation to and from Alcoholics Anonymous
meetings in your community if the attendance is pursuant
to medical advice that membership in Alcoholics Anony-
mous is necessary for the treatment of a disease involving
the excessive use of alcoholic liquors.
Ambulance
You can include in medical expenses amounts you pay for
ambulance service.
Annual Physical Examination
See Physical Examination, later.
Artificial Limb
You can include in medical expenses the amount you pay
for an artificial limb.
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Artificial Teeth
You can include in medical expenses the amount you pay
for artificial teeth.
Autoette
See Wheelchair, later.
Bandages
You can include in medical expenses the cost of medical
supplies such as bandages.
Birth Control Pills
You can include in medical expenses the amount you pay
for birth control pills prescribed by a doctor.
Body Scan
You can include in medical expenses the cost of an elec-
tronic body scan.
Braille Books and Magazines
You can include in medical expenses the part of the cost
of Braille books and magazines for use by a visually im-
paired person that is more than the cost of regular printed
editions.
Breast Pumps and Supplies
You can include in medical expenses the cost of breast
pumps and supplies that assist lactation.
Breast Reconstruction Surgery
You can include in medical expenses the amounts you
pay for breast reconstruction surgery, as well as breast
prosthesis, following a mastectomy for cancer. See Cos
metic Surgery, later.
Capital Expenses
You can include in medical expenses amounts you pay for
special equipment installed in a home, or for improve-
ments, if their main purpose is medical care for you, your
spouse, or your dependent. The cost of permanent im-
provements that increase the value of your property may
be partly included as a medical expense. The cost of the
improvement is reduced by the increase in the value of
your property. The difference is a medical expense. If the
value of your property is not increased by the improve-
ment, the entire cost is included as a medical expense.
Certain improvements made to accommodate a home
to your disabled condition, or that of your spouse or your
dependents who live with you, do not usually increase the
value of the home and the cost can be included in full as
medical expenses. These improvements include, but are
not limited to, the following items.
Constructing entrance or exit ramps for your home.
Widening doorways at entrances or exits to your
home.
Widening or otherwise modifying hallways and interior
doorways.
Installing railings, support bars, or other modifications
to bathrooms.
Lowering or modifying kitchen cabinets and equip-
ment.
Moving or modifying electrical outlets and fixtures.
Installing porch lifts and other forms of lifts (but eleva-
tors generally add value to the house).
Modifying fire alarms, smoke detectors, and other
warning systems.
Modifying stairways.
Adding handrails or grab bars anywhere (whether or
not in bathrooms).
Modifying hardware on doors.
Modifying areas in front of entrance and exit door-
ways.
Grading the ground to provide access to the resi-
dence.
Only reasonable costs to accommodate a home to a
disabled condition are considered medical care. Addi-
tional costs for personal motives, such as for architectural
or aesthetic reasons, are not medical expenses.
Capital expense worksheet. Use Worksheet A to figure
the amount of your capital expense to include in your
medical expenses.
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Capital Expense
Worksheet
Worksheet A.
Keep for Your Records
Instructions: Use this worksheet to figure the amount, if any, of
your medical expenses due to a home improvement.
1. Enter the amount you paid for the home
improvement ......................... 1.
2. Enter the value of your home
immediately after the
improvement .............. 2.
3. Enter the value of your home
immediately before the
improvement .............. 3.
4. Subtract line 3 from line 2. This is the
increase in the value of your home due to
the improvement. ..................... 4.
• If line 4 is more than or equal to line 1,
you have no medical expenses due to the
home improvement; stop here.
• If line 4 is less than line 1, go to line 5.
5. Subtract line 4 from line 1. These are your
medical expenses due to the home
improvement. ........................ 5.
Example. You have a heart ailment. On your doctor's
advice, you install an elevator in your home so that you
will not have to climb stairs. The elevator costs $8,000. An
appraisal shows that the elevator increases the value of
your home by $4,400. You figure your medical expense as
shown in the filled-in example of Worksheet A.
Capital Expense
Worksheet—Illustrated
Worksheet A.
Keep for Your Records
Instructions: Use this worksheet to figure the amount, if any, of
your medical expenses due to a home improvement.
1. Enter the amount you paid for the home
improvement ......................... 1. 8,000
2. Enter the value of your home
immediately after the
improvement .............. 2. 124,400
3. Enter the value of your home
immediately before the
improvement .............. 3. 120,000
4. Subtract line 3 from line 2. This is the
increase in the value of your home due to
the improvement. ..................... 4. 4,400
• If line 4 is more than or equal to line 1,
you have no medical expenses due to the
home improvement; stop here.
• If line 4 is less than line 1, go to line 5.
5. Subtract line 4 from line 1. These are your
medical expenses due to the home
improvement. ........................ 5. 3,600
Operation and upkeep. Amounts you pay for operation
and upkeep of a capital asset qualify as medical expen-
ses, as long as the main reason for them is medical care.
This rule applies even if none or only part of the original
cost of the capital asset qualified as a medical care ex-
pense.
Example. If, in the previous example, the elevator in-
creased the value of your home by $8,000, you would
have no medical expense for the cost of the elevator.
However, the cost of electricity to operate the elevator and
any costs to maintain it are medical expenses as long as
the medical reason for the elevator exists.
Improvements to property rented by a person with a
disability. Amounts paid to buy and install special
plumbing fixtures for a person with a disability, mainly for
medical reasons, in a rented house are medical expen-
ses.
Example. John has arthritis and a heart condition. He
cannot climb stairs or get into a bathtub. On his doctor's
advice, he installs a bathroom with a shower stall on the
first floor of his two-story rented house. The landlord did
not pay any of the cost of buying and installing the special
plumbing and did not lower the rent. John can include in
medical expenses the entire amount he paid.
Car
You can include in medical expenses the cost of special
hand controls and other special equipment installed in a
car for the use of a person with a disability.
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Special design. You can include in medical expenses
the difference between the cost of a regular car and a car
specially designed to hold a wheelchair.
Cost of operation. The includible costs of using a car for
medical reasons are explained under Transportation,
later.
Chiropractor
You can include in medical expenses fees you pay to a
chiropractor for medical care.
Christian Science Practitioner
You can include in medical expenses fees you pay to
Christian Science practitioners for medical care.
Contact Lenses
You can include in medical expenses amounts you pay for
contact lenses needed for medical reasons. You can also
include the cost of equipment and materials required for
using contact lenses, such as saline solution and enzyme
cleaner. See Eyeglasses and Eye Surgery, later.
Crutches
You can include in medical expenses the amount you pay
to buy or rent crutches.
Dental Treatment
You can include in medical expenses the amounts you
pay for the prevention and alleviation of dental disease.
Preventive treatment includes the services of a dental hy-
gienist or dentist for such procedures as teeth cleaning,
the application of sealants, and fluoride treatments to pre-
vent tooth decay. Treatment to alleviate dental disease in-
clude services of a dentist for procedures such as X-rays,
fillings, braces, extractions, dentures, and other dental ail-
ments. But see Teeth Whitening under What Expenses
Are Not Includible, later.
Diagnostic Devices
You can include in medical expenses the cost of devices
used in diagnosing and treating illness and disease.
Example. You have diabetes and use a blood sugar
test kit to monitor your blood sugar level. You can include
the cost of the blood sugar test kit in your medical expen-
ses.
Disabled Dependent Care Expenses
Some disabled dependent care expenses may qualify as
either:
Medical expenses, or
Work-related expenses for purposes of taking a credit
for dependent care. (See Publication 503, Child and
Dependent Care Expenses.)
You can choose to apply them either way as long as you
do not use the same expenses to claim both a credit and a
medical expense deduction.
Drug Addiction
You can include in medical expenses amounts you pay for
an inpatient's treatment at a therapeutic center for drug
addiction. This includes meals and lodging at the center
during treatment.
Drugs
See Medicines, later.
Eye Exam
You can include in medical expenses the amount you pay
for eye examinations.
Eyeglasses
You can include in medical expenses amounts you pay for
eyeglasses and contact lenses needed for medical rea-
sons. See Contact Lenses, earlier, for more information.
Eye Surgery
You can include in medical expenses the amount you pay
for eye surgery to treat defective vision, such as laser eye
surgery or radial keratotomy.
Fertility Enhancement
You can include in medical expenses the cost of the fol-
lowing procedures to overcome an inability to have chil-
dren.
Procedures such as in vitro fertilization (including tem-
porary storage of eggs or sperm).
Surgery, including an operation to reverse prior sur-
gery that prevented the person operated on from hav-
ing children.
Founder's Fee
See Lifetime Care—Advance Payments, later.
Guide Dog or Other Service Animal
You can include in medical expenses the costs of buying,
training, and maintaining a guide dog or other service ani-
mal to assist a visually impaired or hearing disabled per-
son, or a person with other physical disabilities. In gen-
eral, this includes any costs, such as food, grooming, and
veterinary care, incurred in maintaining the health and vi-
tality of the service animal so that it may perform its duties.
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Health Institute
You can include in medical expenses fees you pay for
treatment at a health institute only if the treatment is pre-
scribed by a physician and the physician issues a state-
ment that the treatment is necessary to alleviate a physi-
cal or mental defect or illness of the individual receiving
the treatment.
Health Maintenance
Organization (HMO)
You can include in medical expenses amounts you pay to
entitle you, your spouse, or a dependent to receive medi-
cal care from an HMO. These amounts are treated as
medical insurance premiums. See Insurance Premiums,
later.
Hearing Aids
You can include in medical expenses the cost of a hearing
aid and batteries, repairs, and maintenance needed to op-
erate it.
Home Care
See Nursing Services, later.
Home Improvements
See Capital Expenses, earlier.
Hospital Services
You can include in medical expenses amounts you pay for
the cost of inpatient care at a hospital or similar institution
if a principal reason for being there is to receive medical
care. This includes amounts paid for meals and lodging.
Also see Lodging, later.
Insurance Premiums
You can include in medical expenses insurance premiums
you pay for policies that cover medical care. Medical care
policies can provide payment for treatment that includes:
Hospitalization, surgical services, X-rays,
Prescription drugs and insulin,
Dental care,
Replacement of lost or damaged contact lenses, and
Long-term care (subject to additional limitations). See
Qualified LongTerm Care Insurance Contracts under
LongTerm Care, later.
If you have a policy that provides payments for other
than medical care, you can include the premiums for the
medical care part of the policy if the charge for the medi-
cal part is reasonable. The cost of the medical part must
be separately stated in the insurance contract or given to
you in a separate statement.
Health coverage tax credit. If, during 2012, you were
an eligible trade adjustment assistance (TAA) recipient,
alternative TAA (ATAA) recipient, reemployment TAA
(RTAA) recipient, or Pension Benefit Guaranty Corpora-
tion (PBGC) pension recipient, you must complete Form
8885 before completing Schedule A, line 1. When figuring
the amount of insurance premiums you can deduct on
Schedule A, do not include:
Any amounts you included on Form 8885, line 4,
Any qualified health insurance premiums you paid to
“U.S. Treasury–HCTC,” or
Any health coverage tax credit advance payments
shown in box 1 of Form 1099-H.
Employer-Sponsored Health Insurance Plan
Do not include in your medical and dental expenses any
insurance premiums paid by an employer-sponsored
health insurance plan unless the premiums are included in
box 1 of your Form W-2, Wage and Tax Statement. Also,
do not include any other medical and dental expenses
paid by the plan unless the amount paid is included in
box 1 of your Form W-2.
Example. You are a federal employee participating in
the premium conversion plan of the Federal Employee
Health Benefits (FEHB) program. Your share of the FEHB
premium is paid by making a pre-tax reduction in your sal-
ary. Because you are an employee whose insurance pre-
miums are paid with money that is never included in your
gross income, you cannot deduct the premiums paid with
that money.
Long-term care services. Contributions made by your
employer to provide coverage for qualified long-term care
services under a flexible spending or similar arrangement
must be included in your income. This amount will be re-
ported as wages in box 1 of your Form W-2.
Retired public safety officers. If you are a retired pub-
lic safety officer, do not include as medical expenses any
health or long-term care insurance premiums that you
elected to have paid with tax-free distributions from a re-
tirement plan. This applies only to distributions that would
otherwise be included in income.
Health reimbursement arrangement (HRA). If you
have medical expenses that are reimbursed by a health
reimbursement arrangement, you cannot include those
expenses in your medical expenses. This is because an
HRA is funded solely by the employer.
Medicare A
If you are covered under social security (or if you are a
government employee who paid Medicare tax), you are
enrolled in Medicare A. The payroll tax paid for Medicare
A is not a medical expense.
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If you are not covered under social security (or were not
a government employee who paid Medicare tax), you can
voluntarily enroll in Medicare A. In this situation you can
include the premiums you paid for Medicare A as a medi-
cal expense.
Medicare B
Medicare B is a supplemental medical insurance. Premi-
ums you pay for Medicare B are a medical expense.
Check the information you received from the Social Se-
curity Administration to find out your premium.
Medicare D
Medicare D is a voluntary prescription drug insurance pro-
gram for persons with Medicare A or B. You can include
as a medical expense premiums you pay for Medicare D.
Prepaid Insurance Premiums
Premiums you pay before you are age 65 for insurance for
medical care for yourself, your spouse, or your depend-
ents after you reach age 65 are medical care expenses in
the year paid if they are:
1. Payable in equal yearly installments or more often,
and
2. Payable for at least 10 years, or until you reach age
65 (but not for less than 5 years).
Unused Sick Leave Used To Pay Premiums
You must include in gross income cash payments you re-
ceive at the time of retirement for unused sick leave. You
also must include in gross income the value of unused
sick leave that, at your option, your employer applies to
the cost of your continuing participation in your employer's
health plan after you retire. You can include this cost of
continuing participation in the health plan as a medical ex-
pense.
If you participate in a health plan where your employer
automatically applies the value of unused sick leave to the
cost of your continuing participation in the health plan
(and you do not have the option to receive cash), do not
include the value of the unused sick leave in gross in-
come. You cannot include this cost of continuing partici-
pation in that health plan as a medical expense.
Insurance Premiums You Cannot Include
You cannot include premiums you pay for:
Life insurance policies,
Policies providing payment for loss of earnings,
Policies for loss of life, limb, sight, etc.,
Policies that pay you a guaranteed amount each week
for a stated number of weeks if you are hospitalized
for sickness or injury,
The part of your car insurance that provides medical
insurance coverage for all persons injured in or by
your car because the part of the premium providing in-
surance for you, your spouse, and your dependents is
not stated separately from the part of the premium
providing insurance for medical care for others, or
Health or long-term care insurance if you elected to
pay these premiums with tax-free distributions from a
retirement plan made directly to the insurance pro-
vider and these distributions would otherwise have
been included in income.
Taxes imposed by any governmental unit, such as Medi-
care taxes, are not insurance premiums.
Coverage for nondependents. Generally, you cannot
deduct any additional premium you pay as the result of in-
cluding on your policy someone who is not your spouse or
dependent, even if that person is your child under age 27.
However, you can deduct the additional premium if that
person is:
Your child whom you do not claim as a dependent be-
cause of the rules for children of divorced or separa-
ted parents,
Any person you could have claimed as a dependent
on your return except that person received $3,800 or
more of gross income or filed a joint return, or
Any person you could have claimed as a dependent
except that you, or your spouse if filing jointly, can be
claimed as a dependent on someone else's 2012 re-
turn.
Also, if you had family coverage when you added this indi-
vidual to your policy and your premiums did not increase,
you can enter on line 1 the full amount of your medical and
dental insurance premiums.
Intellectually and Developmentally
Disabled, Special Home for
You can include in medical expenses the cost of keeping
a person who is intellectually and developmentally disa-
bled in a special home, not the home of a relative, on the
recommendation of a psychiatrist to help the person ad-
just from life in a mental hospital to community living.
Laboratory Fees
You can include in medical expenses the amounts you
pay for laboratory fees that are part of medical care.
Lactation Expenses
See Breast Pumps and Supplies, earlier.
Lead-Based Paint Removal
You can include in medical expenses the cost of removing
lead-based paints from surfaces in your home to prevent a
child who has or had lead poisoning from eating the paint.
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These surfaces must be in poor repair (peeling or crack-
ing) or within the child's reach. The cost of repainting the
scraped area is not a medical expense.
If, instead of removing the paint, you cover the area
with wallboard or paneling, treat these items as capital ex-
penses. See Capital Expenses, earlier. Do not include the
cost of painting the wallboard as a medical expense.
Learning Disability
See Special Education, later.
Legal Fees
You can include in medical expenses legal fees you paid
that are necessary to authorize treatment for mental ill-
ness. However, you cannot include in medical expenses
fees for the management of a guardianship estate, fees
for conducting the affairs of the person being treated, or
other fees that are not necessary for medical care.
Lifetime Care—Advance Payments
You can include in medical expenses a part of a life-care
fee or “founder's fee” you pay either monthly or as a lump
sum under an agreement with a retirement home. The part
of the payment you include is the amount properly alloca-
ble to medical care. The agreement must require that you
pay a specific fee as a condition for the home's promise to
provide lifetime care that includes medical care. You can
use a statement from the retirement home to prove the
amount properly allocable to medical care. The statement
must be based either on the home's prior experience or on
information from a comparable home.
Dependents with disabilities. You can include in medi-
cal expenses advance payments to a private institution for
lifetime care, treatment, and training of your physically or
mentally impaired child upon your death or when you be-
come unable to provide care. The payments must be a
condition for the institution's future acceptance of your
child and must not be refundable.
Payments for future medical care. Generally, you can-
not include in medical expenses current payments for
medical care (including medical insurance) to be provided
substantially beyond the end of the year. This rule does
not apply in situations where the future care is purchased
in connection with obtaining lifetime care of the type de-
scribed earlier.
Lodging
You can include in medical expenses the cost of meals
and lodging at a hospital or similar institution if a principal
reason for being there is to receive medical care. See
Nursing Home, later.
You may be able to include in medical expenses the
cost of lodging not provided in a hospital or similar institu-
tion. You can include the cost of such lodging while away
from home if all of the following requirements are met.
1. The lodging is primarily for and essential to medical
care.
2. The medical care is provided by a doctor in a licensed
hospital or in a medical care facility related to, or the
equivalent of, a licensed hospital.
3. The lodging is not lavish or extravagant under the cir-
cumstances.
4. There is no significant element of personal pleasure,
recreation, or vacation in the travel away from home.
The amount you include in medical expenses for lodg-
ing cannot be more than $50 for each night for each per-
son. You can include lodging for a person traveling with
the person receiving the medical care. For example, if a
parent is traveling with a sick child, up to $100 per night
can be included as a medical expense for lodging. Meals
are not included.
Do not include the cost of lodging while away from
home for medical treatment if that treatment is not re-
ceived from a doctor in a licensed hospital or in a medical
care facility related to, or the equivalent of, a licensed hos-
pital or if that lodging is not primarily for or essential to the
medical care received.
Long-Term Care
You can include in medical expenses amounts paid for
qualified long-term care services and premiums paid for
qualified long-term care insurance contracts.
Qualified Long-Term Care Services
Qualified long-term care services are necessary diagnos-
tic, preventive, therapeutic, curing, treating, mitigating, re-
habilitative services, and maintenance and personal care
services (defined later) that are:
1. Required by a chronically ill individual, and
2. Provided pursuant to a plan of care prescribed by a li-
censed health care practitioner.
Chronically ill individual. An individual is chronically ill
if, within the previous 12 months, a licensed health care
practitioner has certified that the individual meets either of
the following descriptions.
1. He or she is unable to perform at least two activities of
daily living without substantial assistance from an-
other individual for at least 90 days, due to a loss of
functional capacity. Activities of daily living are eating,
toileting, transferring, bathing, dressing, and conti-
nence.
2. He or she requires substantial supervision to be pro-
tected from threats to health and safety due to severe
cognitive impairment.
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Maintenance and personal care services. Mainte-
nance or personal care services is care which has as its
primary purpose the providing of a chronically ill individual
with needed assistance with his or her disabilities (includ-
ing protection from threats to health and safety due to se-
vere cognitive impairment).
Qualified Long-Term Care Insurance
Contracts
A qualified long-term care insurance contract is an insur-
ance contract that provides only coverage of qualified
long-term care services. The contract must:
1. Be guaranteed renewable,
2. Not provide for a cash surrender value or other money
that can be paid, assigned, pledged, or borrowed,
3. Provide that refunds, other than refunds on the death
of the insured or complete surrender or cancellation
of the contract, and dividends under the contract must
be used only to reduce future premiums or increase
future benefits, and
4. Generally not pay or reimburse expenses incurred for
services or items that would be reimbursed under
Medicare, except where Medicare is a secondary
payer, or the contract makes per diem or other peri-
odic payments without regard to expenses.
The amount of qualified long-term care premiums you
can include is limited. You can include the following as
medical expenses on Schedule A (Form 1040).
1. Qualified long-term care premiums up to the amounts
shown below.
a. Age 40 or under – $350.
b. Age 41 to 50 – $660.
c. Age 51 to 60 – $1,310.
d. Age 61 to 70 – $3,500.
e. Age 71 or over – $4,370.
2. Unreimbursed expenses for qualified long-term care
services.
Note. The limit on premiums is for each person.
Also, if you are an eligible retired public safety officer,
you cannot include premiums for long-term care insurance
if you elected to pay these premiums with tax-free distribu-
tions from a qualified retirement plan made directly to the
insurance provider and these distributions would other-
wise have been included in your income.
Meals
You can include in medical expenses the cost of meals at
a hospital or similar institution if a principal reason for be-
ing there is to get medical care.
You cannot include in medical expenses the cost of
meals that are not part of inpatient care. Also see
WeightLoss Program and Nutritional Supplements, later.
Medical Conferences
You can include in medical expenses amounts paid for
admission and transportation to a medical conference if
the medical conference concerns the chronic illness of
yourself, your spouse, or your dependent. The costs of
the medical conference must be primarily for and neces-
sary to the medical care of you, your spouse, or your de-
pendent. The majority of the time spent at the conference
must be spent attending sessions on medical information.
The cost of meals and lodging while attending the
conference is not deductible as a medical ex
pense.
Medical Information Plan
You can include in medical expenses amounts paid to a
plan that keeps medical information in a computer data
bank and retrieves and furnishes the information upon re-
quest to an attending physician.
Medicines
You can include in medical expenses amounts you pay for
prescribed medicines and drugs. A prescribed drug is one
that requires a prescription by a doctor for its use by an in-
dividual. You can also include amounts you pay for insu-
lin. Except for insulin, you cannot include in medical ex-
penses amounts you pay for a drug that is not prescribed.
Imported medicines and drugs. If you imported medi-
cines or drugs from other countries, see Medicines and
Drugs From Other Countries, under What Expenses Are
Not Includible, later.
Nursing Home
You can include in medical expenses the cost of medical
care in a nursing home, home for the aged, or similar insti-
tution, for yourself, your spouse, or your dependents. This
includes the cost of meals and lodging in the home if a
principal reason for being there is to get medical care.
Do not include the cost of meals and lodging if the rea-
son for being in the home is personal. You can, however,
include in medical expenses the part of the cost that is for
medical or nursing care.
Nursing Services
You can include in medical expenses wages and other
amounts you pay for nursing services. The services need
not be performed by a nurse as long as the services are of
a kind generally performed by a nurse. This includes serv-
ices connected with caring for the patient's condition,
such as giving medication or changing dressings, as well
CAUTION
!
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as bathing and grooming the patient. These services can
be provided in your home or another care facility.
Generally, only the amount spent for nursing services is
a medical expense. If the attendant also provides per-
sonal and household services, amounts paid to the at-
tendant must be divided between the time spent perform-
ing household and personal services and the time spent
for nursing services. For example, because of your medi-
cal condition you pay a visiting nurse $300 per week for
medical and household services. She spends 10% of her
time doing household services such as washing dishes
and laundry. You can include only $270 per week as med-
ical expenses. The $30 (10% × $300) allocated to house-
hold services cannot be included. However, certain main-
tenance or personal care services provided for qualified
long-term care can be included in medical expenses. See
Maintenance and personal care services under
LongTerm Care, earlier. Additionally, certain expenses
for household services or for the care of a qualifying indi-
vidual incurred to allow you to work may qualify for the
child and dependent care credit. See Publication 503,
Child and Dependent Care Expenses.
You can also include in medical expenses part of the
amount you pay for that attendant's meals. Divide the food
expense among the household members to find the cost
of the attendant's food. Then divide that cost in the same
manner as in the preceding paragraph. If you had to pay
additional amounts for household upkeep because of the
attendant, you can include the extra amounts with your
medical expenses. This includes extra rent or utilities you
pay because you moved to a larger apartment to provide
space for the attendant.
Employment taxes. You can include as a medical ex-
pense social security tax, FUTA, Medicare tax, and state
employment taxes you pay for an attendant who provides
medical care. If the attendant also provides personal and
household services, you can include as a medical ex-
pense only the amount of employment taxes paid for med-
ical services as explained earlier. For information on em-
ployment tax responsibilities of household employers, see
Publication 926, Household Employer's Tax Guide.
Operations
You can include in medical expenses amounts you pay for
legal operations that are not for unnecessary cosmetic
surgery. See Cosmetic Surgery under What Expenses
Are Not Includible, later.
Optometrist
See Eyeglasses, earlier.
Organ Donors
See Transplants, later.
Osteopath
You can include in medical expenses amounts you pay to
an osteopath for medical care.
Oxygen
You can include in medical expenses amounts you pay for
oxygen and oxygen equipment to relieve breathing prob-
lems caused by a medical condition.
Physical Examination
You can include in medical expenses the amount you pay
for an annual physical examination and diagnostic tests
by a physician. You do not have to be ill at the time of the
examination.
Example. Beth goes to see Dr. Hayes for her annual
check-up. Dr. Hayes does a physical examination and has
some lab tests done. Beth can include the cost of the
exam and lab tests in her medical expenses, if her insur-
ance does not cover the cost.
Pregnancy Test Kit
You can include in medical expenses the amount you pay
to purchase a pregnancy test kit to determine if you are
pregnant.
Prosthesis
See Artificial Limb and Breast Reconstruction Surgery,
earlier.
Psychiatric Care
You can include in medical expenses amounts you pay for
psychiatric care. This includes the cost of supporting a
mentally ill dependent at a specially equipped medical
center where the dependent receives medical care. See
Psychoanalysis, next, and Transportation, later.
Psychoanalysis
You can include in medical expenses payments for psy-
choanalysis. However, you cannot include payments for
psychoanalysis that is part of required training to be a psy-
choanalyst.
Psychologist
You can include in medical expenses amounts you pay to
a psychologist for medical care.
Special Education
You can include in medical expenses fees you pay on a
doctor's recommendation for a child's tutoring by a
teacher who is specially trained and qualified to work with
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children who have learning disabilities caused by mental
or physical impairments, including nervous system disor-
ders.
You can include in medical expenses the cost (tuition,
meals, and lodging) of attending a school that furnishes
special education to help a child to overcome learning dis-
abilities. A doctor must recommend that the child attend
the school. Overcoming the learning disabilities must be a
principal reason for attending the school, and any ordinary
education received must be incidental to the special edu-
cation provided. Special education includes:
Teaching Braille to a visually impaired person,
Teaching lip reading to a hearing disabled person, or
Giving remedial language training to correct a condi-
tion caused by a birth defect.
You cannot include in medical expenses the cost of
sending a problem child to a school where the course of
study and the disciplinary methods have a beneficial ef-
fect on the child's attitude if the availability of medical care
in the school is not a principal reason for sending the stu-
dent there.
Sterilization
You can include in medical expenses the cost of a legal
sterilization (a legally performed operation to make a per-
son unable to have children). Also see Vasectomy, later.
Stop-Smoking Programs
You can include in medical expenses amounts you pay for
a program to stop smoking. However, you cannot include
in medical expenses amounts you pay for drugs that do
not require a prescription, such as nicotine gum or
patches, that are designed to help stop smoking.
Surgery
See Operations, earlier.
Telephone
You can include in medical expenses the cost of special
telephone equipment that lets a person with a hearing or
speech disability communicate over a regular telephone.
This includes teletypewriter (TTY) and telecommunica-
tions device for the deaf (TDD) equipment. You can also
include the cost of repairing the equipment.
Television
You can include in medical expenses the cost of equip-
ment that displays the audio part of television programs as
subtitles for persons with a hearing disability. This may be
the cost of an adapter that attaches to a regular set. It also
may be the part of the cost of a specially equipped televi-
sion that exceeds the cost of the same model regular
television set.
Therapy
You can include in medical expenses amounts you pay for
therapy received as medical treatment.
Transplants
You can include in medical expenses amounts paid for
medical care you receive because you are a donor or a
possible donor of a kidney or other organ. This includes
transportation.
You can include any expenses you pay for the medical
care of a donor in connection with the donating of an or-
gan. This includes transportation.
Transportation
You can include in medical expenses amounts paid for
transportation primarily for, and essential to, medical care.
You can include:
Bus, taxi, train, or plane fares or ambulance service,
Transportation expenses of a parent who must go with
a child who needs medical care,
Transportation expenses of a nurse or other person
who can give injections, medications, or other treat-
ment required by a patient who is traveling to get med-
ical care and is unable to travel alone, and
Transportation expenses for regular visits to see a
mentally ill dependent, if these visits are recommen-
ded as a part of treatment.
Car expenses. You can include out-of-pocket expenses,
such as the cost of gas and oil, when you use a car for
medical reasons. You cannot include depreciation, insur-
ance, general repair, or maintenance expenses.
If you do not want to use your actual expenses for
2012, you can use the standard medical mileage rate of
23 cents a mile.
You can also include parking fees and tolls. You can
add these fees and tolls to your medical expenses
whether you use actual expenses or the standard mileage
rate.
Example. In 2012, Bill Jones drove 2,800 miles for
medical reasons. He spent $500 for gas, $30 for oil, and
$100 for tolls and parking. He wants to figure the amount
he can include in medical expenses both ways to see
which gives him the greater deduction.
He figures the actual expenses first. He adds the $500
for gas, the $30 for oil, and the $100 for tolls and parking
for a total of $630.
He then figures the standard mileage amount. He multi-
plies 2,800 miles by 23 cents a mile for a total of $644. He
then adds the $100 tolls and parking for a total of $744.
Bill includes the $744 of car expenses with his other
medical expenses for the year because the $744 is more
than the $630 he figured using actual expenses.
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Transportation expenses you cannot include. You
cannot include in medical expenses the cost of transpor-
tation in the following situations.
Going to and from work, even if your condition re-
quires an unusual means of transportation.
Travel for purely personal reasons to another city for
an operation or other medical care.
Travel that is merely for the general improvement of
one's health.
The costs of operating a specially equipped car for
other than medical reasons.
Trips
You can include in medical expenses amounts you pay for
transportation to another city if the trip is primarily for, and
essential to, receiving medical services. You may be able
to include up to $50 for each night for each person. You
can include lodging for a person traveling with the person
receiving the medical care. For example, if a parent is
traveling with a sick child, up to $100 per night can be in-
cluded as a medical expense for lodging. Meals are not
included. See Lodging, earlier.
You cannot include in medical expenses a trip or vaca-
tion taken merely for a change in environment, improve-
ment of morale, or general improvement of health, even if
the trip is made on the advice of a doctor. However, see
Medical Conferences, earlier.
Tuition
Under special circumstances, you can include charges for
tuition in medical expenses. See Special Education, ear-
lier.
You can include charges for a health plan included in a
lump-sum tuition fee if the charges are separately stated
or can easily be obtained from the school.
Vasectomy
You can include in medical expenses the amount you pay
for a vasectomy.
Vision Correction Surgery
See Eye Surgery, earlier.
Weight-Loss Program
You can include in medical expenses amounts you pay to
lose weight if it is a treatment for a specific disease diag-
nosed by a physician (such as obesity, hypertension, or
heart disease). This includes fees you pay for member-
ship in a weight reduction group as well as fees for attend-
ance at periodic meetings. You cannot include member-
ship dues in a gym, health club, or spa as medical
expenses, but you can include separate fees charged
there for weight loss activities.
You cannot include the cost of diet food or beverages
in medical expenses because the diet food and bever-
ages substitute for what is normally consumed to satisfy
nutritional needs. You can include the cost of special food
in medical expenses only if:
1. The food does not satisfy normal nutritional needs,
2. The food alleviates or treats an illness, and
3. The need for the food is substantiated by a physician.
The amount you can include in medical expenses is limi-
ted to the amount by which the cost of the special food ex-
ceeds the cost of a normal diet. See also WeightLoss
Program under What Expenses Are Not Includible, later.
Wheelchair
You can include in medical expenses amounts you pay for
an autoette or a wheelchair used mainly for the relief of
sickness or disability, and not just to provide transporta-
tion to and from work. The cost of operating and maintain-
ing the autoette or wheelchair is also a medical expense.
Wig
You can include in medical expenses the cost of a wig
purchased upon the advice of a physician for the mental
health of a patient who has lost all of his or her hair from
disease.
X-ray
You can include in medical expenses amounts you pay for
X-rays for medical reasons.
What Expenses Are Not
Includible?
Following is a list of some items that you cannot include in
figuring your medical expense deduction. The items are
listed in alphabetical order.
Baby Sitting, Childcare, and Nursing
Services for a Normal, Healthy Baby
You cannot include in medical expenses amounts you pay
for the care of children, even if the expenses enable you,
your spouse, or your dependent to get medical or dental
treatment. Also, any expense allowed as a childcare credit
cannot be treated as an expense paid for medical care.
Controlled Substances
You cannot include in medical expenses amounts you pay
for controlled substances (such as marijuana, laetrile,
etc.). Such substances may be legalized by state law.
However, they are in violation of federal law and cannot
be included in medical expenses.
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Cosmetic Surgery
Generally, you cannot include in medical expenses the
amount you pay for unnecessary cosmetic surgery. This
includes any procedure that is directed at improving the
patient's appearance and does not meaningfully promote
the proper function of the body or prevent or treat illness
or disease. You generally cannot include in medical ex-
penses the amount you pay for procedures such as face
lifts, hair transplants, hair removal (electrolysis), and lipo-
suction.
You can include in medical expenses the amount you
pay for cosmetic surgery if it is necessary to improve a de-
formity arising from, or directly related to, a congenital ab-
normality, a personal injury resulting from an accident or
trauma, or a disfiguring disease.
Example. An individual undergoes surgery that re-
moves a breast as part of treatment for cancer. She pays
a surgeon to reconstruct the breast. The surgery to recon-
struct the breast corrects a deformity directly related to the
disease. The cost of the surgery is includible in her medi-
cal expenses.
Dancing Lessons
You cannot include in medical expenses the cost of danc-
ing lessons, swimming lessons, etc., even if they are rec-
ommended by a doctor, if they are only for the improve-
ment of general health.
Diaper Service
You cannot include in medical expenses the amount you
pay for diapers or diaper services, unless they are needed
to relieve the effects of a particular disease.
Electrolysis or Hair Removal
See Cosmetic Surgery, earlier.
Flexible Spending Account
You cannot include in medical expenses amounts for
which you are fully reimbursed by your flexible spending
account if you contribute a part of your income on a
pre-tax basis to pay for the qualified benefit.
Funeral Expenses
You cannot include in medical expenses amounts you pay
for funerals.
Future Medical Care
Generally, you cannot include in medical expenses cur-
rent payments for medical care (including medical insur-
ance) to be provided substantially beyond the end of the
year. This rule does not apply in situations where the fu-
ture care is purchased in connection with obtaining
lifetime care or long-term care of the type described at
Lifetime Care—Advance Payments or LongTerm Care,
earlier under What Medical Expenses Are Includible.
Hair Transplant
See Cosmetic Surgery, earlier.
Health Club Dues
You cannot include in medical expenses health club dues
or amounts paid to improve one's general health or to re-
lieve physical or mental discomfort not related to a partic-
ular medical condition.
You cannot include in medical expenses the cost of
membership in any club organized for business, pleasure,
recreation, or other social purpose.
Health Coverage Tax Credit
You cannot include in medical expenses amounts you pay
for health insurance that you use in figuring your health
coverage tax credit. For more information, see Health
Coverage Tax Credit, later.
Health Savings Accounts
You cannot include in medical expenses any payment or
distribution for medical expenses out of a health savings
account. Contributions to health savings accounts are de-
ducted separately. See Publication 969.
Household Help
You cannot include in medical expenses the cost of
household help, even if such help is recommended by a
doctor. This is a personal expense that is not deductible.
However, you may be able to include certain expenses
paid to a person providing nursing-type services. For
more information, see Nursing Services, earlier under
What Medical Expenses Are Includible. Also, certain
maintenance or personal care services provided for quali-
fied long-term care can be included in medical expenses.
For more information, see LongTerm Care, earlier under
What Medical Expenses Are Includible.
Illegal Operations and Treatments
You cannot include in medical expenses amounts you pay
for illegal operations, treatments, or controlled substances
whether rendered or prescribed by licensed or unlicensed
practitioners.
Insurance Premiums
See Insurance Premiums under What Medical Expenses
Are Includible, earlier.
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Maternity Clothes
You cannot include in medical expenses amounts you pay
for maternity clothes.
Medical Savings Account (MSA)
You cannot include in medical expenses amounts you
contribute to an Archer MSA. You cannot include expen-
ses you pay for with a tax-free distribution from your
Archer MSA. You also cannot use other funds equal to the
amount of the distribution and include the expenses. For
more information on Archer MSAs, see Publication 969.
Medicines and Drugs From Other
Countries
In general, you cannot include in your medical expenses
the cost of a prescribed drug brought in (or ordered ship-
ped) from another country. You can only include the cost
of a drug that was imported legally. For example, you can
include the cost of a prescribed drug the Food and Drug
Administration announces can be legally imported by indi-
viduals.
You can include the cost of a prescribed drug you pur-
chase and consume in another country if the drug is legal
in both the other country and the United States.
Nonprescription Drugs and Medicines
Except for insulin, you cannot include in medical expen-
ses amounts you pay for a drug that is not prescribed.
Example. Your doctor recommends that you take as-
pirin. Because aspirin is a drug that does not require a
physician's prescription, you cannot include its cost in
your medical expenses.
Nutritional Supplements
You cannot include in medical expenses the cost of nutri-
tional supplements, vitamins, herbal supplements, “natu-
ral medicines,” etc. unless they are recommended by a
medical practitioner as treatment for a specific medical
condition diagnosed by a physician. Otherwise, these
items are taken to maintain your ordinary good health, and
are not for medical care.
Personal Use Items
You cannot include in medical expenses the cost of an
item ordinarily used for personal, living, or family purposes
unless it is used primarily to prevent or alleviate a physical
or mental defect or illness. For example, the cost of a
toothbrush and toothpaste is a nondeductible personal ex-
pense.
In order to accommodate an individual with a physical
defect, you may have to purchase an item ordinarily used
as a personal, living, or family item in a special form. You
can include the excess of the cost of the item in a special
form over the cost of the item in normal form as a medical
expense. (See Braille Books and Magazines under What
Medical Expenses Are Includible, earlier.)
Swimming Lessons
See Dancing Lessons, earlier.
Teeth Whitening
You cannot include in medical expenses amounts paid to
whiten teeth. See Cosmetic Surgery, earlier.
Veterinary Fees
You generally cannot include veterinary fees in your medi-
cal expenses, but see Guide Dog or Other Service Animal
under What Medical Expenses Are Includible, earlier.
Weight-Loss Program
You cannot include in medical expenses the cost of a
weight-loss program if the purpose of the weight loss is
the improvement of appearance, general health, or sense
of well-being. You cannot include amounts you pay to lose
weight unless the weight loss is a treatment for a specific
disease diagnosed by a physician (such as obesity, hy-
pertension, or heart disease). If the weight-loss treatment
is not for a specific disease diagnosed by a physician, you
cannot include either the fees you pay for membership in
a weight reduction group or fees for attendance at peri-
odic meetings. Also, you cannot include membership
dues in a gym, health club, or spa.
You cannot include the cost of diet food or beverages
in medical expenses because the diet food and bever-
ages substitute for what is normally consumed to satisfy
nutritional needs.
See WeightLoss Program under What Medical Expen
ses Are Includible, earlier.
How Do You Treat
Reimbursements?
You can include in medical expenses only those amounts
paid during the tax year for which you received no insur-
ance or other reimbursement.
Insurance Reimbursement
You must reduce your total medical expenses for the year
by all reimbursements for medical expenses that you re-
ceive from insurance or other sources during the year.
This includes payments from Medicare.
Even if a policy provides reimbursement only for certain
specific medical expenses, you must use amounts you re-
ceive from that policy to reduce your total medical
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expenses, including those it does not provide reimburse-
ment for.
Example. You have insurance policies that cover your
hospital and doctors' bills but not your nursing bills. The
insurance you receive for the hospital and doctors' bills is
more than their charges. In figuring your medical deduc-
tion, you must reduce the total amount you spent for medi-
cal care by the total amount of insurance you received,
even if the policies do not cover some of your medical ex-
penses.
Health reimbursement arrangement (HRA). A health
reimbursement arrangement is an employer-funded plan
that reimburses employees for medical care expenses
and allows unused amounts to be carried forward. An
HRA is funded solely by the employer and the reimburse-
ments for medical expenses, up to a maximum dollar
amount for a coverage period, are not included in your in-
come.
Other reimbursements. Generally, you do not reduce
medical expenses by payments you receive for:
Permanent loss or loss of use of a member or function
of the body (loss of limb, sight, hearing, etc.) or disfig-
urement to the extent the payment is based on the na-
ture of the injury without regard to the amount of time
lost from work, or
Loss of earnings.
You must, however, reduce your medical expenses by
any part of these payments that is designated for medical
costs. See How Do You Figure and Report the Deduction
on Your Tax Return, later.
For how to treat damages received for personal injury
or sickness, see Damages for Personal Injuries, later.
What If Your Insurance Reimbursement Is
More Than Your Medical Expenses?
If you are reimbursed more than your medical expenses,
you may have to include the excess in income. You may
want to use Figure 1 to help you decide if any of your re-
imbursement is taxable.
Figure 1.
*See Premiums paid by you and your employer.
Was any part of
your premiums
paid by your
employer?
Were your
employer’s
contributions to
your premiums
included in your
income?
Did you pay any
part of the
premiums?
NONE of the
excess
reimbursement is
taxable.
ALL of the excess
reimbursement is
taxable.
PART of the
excess
reimbursement is
taxable.*
No
䊴
䊳
䊲
Yes
Yes
No
No
Yes
䊲
䊲
䊳
Is Your Excess Medical
Reimbursement Taxable?
Premiums paid by you. If you pay either the entire pre-
mium for your medical insurance or all the costs of a plan
similar to medical insurance and your insurance payments
or other reimbursements are more than your total medical
expenses for the year, you have excess reimbursement.
Generally, you do not include the excess reimbursement
in your gross income. However, gross income does in-
clude total payments in excess of $310 a day ($113,460
for 2012) for qualified long-term care services.
Premiums paid by you and your employer. If both you
and your employer contribute to your medical insurance
plan and your employer's contributions are not included in
your gross income, you must include in your gross income
the part of your excess reimbursement that is from your
employer's contribution.
If you are not covered by more than one policy, you can
figure the amount of the excess reimbursement you must
include in gross income using Worksheet B. If you are
covered under more than one policy, see More than one
policy, later.
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Excess Reimbursement
Includible in Income
When You Have Only
One Policy
Worksheet B.
Keep for Your Records
Instructions: Use this worksheet to figure the amount of excess
reimbursement you must include in income when both you and your
employer contributed to your medical insurance and your employer's
contributions are not included in your gross income.
1. Enter the amount contributed to your
medical insurance for the year by your
employer. ........................ 1.
2. Enter the total annual cost of the
policy. ........................... 2.
3. Divide line 1 by line 2 ............... 3.
4. Enter the amount of excess
reimbursement. ................... 4.
5. Multiply line 3 by line 4. This is the
amount of the excess reimburse-
ment you must include as other income
on Form 1040, line 21. ............. 5.
Example. You are covered by your employer's medi-
cal insurance policy. The annual premium is $2,000. Your
employer pays $600 of that amount, which is not included
in your gross income, and the balance of $1,400 is taken
out of your wages. You receive $500 excess reimburse-
ment for your medical expenses. The part of the excess
reimbursement you receive under the policy that is from
your employer's contributions is figured as follows.
Excess Reimbursement
Includible in Income
When You Have Only
One Policy—Illustrated
Worksheet B.
Keep for Your Records
Instructions: Use this worksheet to figure the amount of excess
reimbursement you must include in income when both you and your
employer contributed to your medical insurance and your employer's
contributions are not included in your gross income.
1. Enter the amount contributed to your
medical insurance for the year by your
employer. ........................ 1. 600
2. Enter the total annual cost of the
policy. ........................... 2. 2,000
3. Divide line 1 by line 2 ............... 3. .30
4. Enter the amount of excess
reimbursement. ................... 4. 500
5. Multiply line 3 by line 4. This is the
amount of the excess reimbursement
you must include as other income on
Form 1040, line 21. ................ 5. 150
You must include in your gross income 30% (.30) of
$500, or $150, of the excess reimbursement you received
for medical expenses under the policy.
Premiums paid by your employer. If your employer or
your former employer pays the total cost of your medical
insurance plan and your employer's contributions are not
included in your income, you must report all of your ex-
cess reimbursement as other income.
More than one policy. If you are covered under more
than one policy, the cost of at least one of which is paid by
both you and your employer, you must first divide the
medical expenses among the policies to figure the excess
reimbursement from each policy. Then divide the policy
costs to figure the part of any excess reimbursement that
is from your employer's contribution. Any excess reim-
bursement that is due to your employer's contributions is
includible in your income.
You can figure the part of the excess reimbursement
that is from your employer's contribution by using Work-
sheet C. Use Worksheet C only if both you and your em-
ployer paid part of the cost of at least one policy. If you
had more than one policy, but you did not share in the
cost of at least one policy, do not use Worksheet C.
Excess
Reimbursement
Includible in Income
When You Have More
Than One Policy
Worksheet C.
Keep for Your Records
Instructions: Use this worksheet to figure the amount of excess
reimbursement you must include as income on your tax return when
a) you are reimbursed under two or more health insurance policies,
b) at least one of which is paid for by both you and your employer,
and c) your employer's contributions are not included in your gross
income. If you and your employer did not share in the cost of at least
one policy, do not use this worksheet.
1. Enter the reimbursement from your
employer's policy. ................... 1.
2. Enter the reimbursement from your own
policy. ............................. 2.
3. Add lines 1 and 2 .................... 3.
4. Divide line 1 by line 3. ................ 4.
5. Enter the total medical expenses you paid
during the year. If this amount is at least as
much as the amount on line 3, stop here
because there is no excess
reimbursement. ..................... 5.
6. Multiply line 4 by line 5 ............... 6.
7. Subtract line 6 from line 1 ............. 7.
8. Enter employer's contribution to the
annual cost of the employer's
policy. ............................. 8.
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9. Enter total annual cost of the employer's
policy. ............................. 9.
10. Divide line 8 by line 9. This is the
percentage of your total excess
reimbursement you must report as other
income. ............................ 10.
11. Multiply line 7 by line 10. This is the
amount of your total excess
reimbursement you must report as other
income on Form 1040, line 21. ......... 11.
Example. You are covered by your employer's health
insurance policy. The annual premium is $1,200. Your
employer pays $300 and the balance of $900 is deducted
from your wages. You also paid the entire premium ($250)
for a personal health insurance policy.
During the year, you paid medical expenses of $3,600.
In the same year, you were reimbursed $2,400 under your
employer's policy and $1,600 under your own personal
policy. The amount you must report as other income is fig-
ured as follows.
Excess Reimbursement
Includible in Income When
You Have More Than One
Policy—Illustrated
Instructions: Use this worksheet to figure the amount of excess
reimbursement you must include as income on your tax return when
a) you are reimbursed under two or more health insurance policies,
b) at least one of which is paid for by both you and your employer,
and c) your employer's contributions are not included in your gross
income. If you and your employer did not share in the cost of at least
one policy, do not use this worksheet.
1. Enter the reimbursement from your
employer's policy. .................... 1. 2,400
2. Enter the reimbursement from your own
policy. ............................. 2. 1,600
3. Add lines 1 and 2 .................... 3. 4,000
4. Divide line 1 by line 3 ................. 4. .60
5. Enter the total medical expenses you paid
during the year. If this amount is at least as
much as the amount on line 3, stop here
because there is no excess
reimbursement. ..................... 5. 3,600
6. Multiply line 4 by line 5 ............... 6. 2,160
7. Subtract line 6 from line 1 ............. 7. 240
8. Enter employer's contribution to the annual
cost of the employer's policy. .......... 8. 300
9. Enter total annual cost of the employer's
policy. ............................. 9. 1,200
10. Divide line 8 by line 9. This is the
percentage of your total excess
reimbursement you must report as other
income. ............................ 10. .25
11. Multiply line 7 by line 10. This is the amount
of your total excess reimbursement you
must report as other income on Form 1040,
line 21. ............................ 11. 60
What If You Receive Insurance
Reimbursement in a Later Year?
If you are reimbursed in a later year for medical expenses
you deducted in an earlier year, you generally must report
the reimbursement as income up to the amount you previ-
ously deducted as medical expenses.
However, you do not report as income the amount of
reimbursement you received up to the amount of your
medical deductions that did not reduce your tax for the
earlier year.
For more information about the recovery of an amount
that you claimed as an itemized deduction in an earlier
year, see Recoveries in Publication 525, Taxable and
Nontaxable Income.
Worksheet C.
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What If You Are Reimbursed for Medical
Expenses You Did Not Deduct?
If you did not deduct a medical expense in the year you
paid it because your medical expenses were not more
than 7.5% of your AGI, or because you did not itemize de-
ductions, do not include the reimbursement, up to the
amount of the expense, in income. However, if the reim-
bursement is more than the expense, see What If Your In
surance Reimbursement Is More Than Your Medical Ex
penses, earlier.
Example. Last year, you had $500 of medical expen-
ses. You cannot deduct the $500 because it is less than
7.5% of your AGI. If, in a later year, you are reimbursed for
any of the $500 of medical expenses, you do not include
that amount in your gross income.
How Do You Figure and Report
the Deduction on Your Tax
Return?
Once you have determined which medical expenses you
can include, figure and report the deduction on your tax
return.
What Tax Form Do You Use?
You report your medical expense deduction on Sched-
ule A, Form 1040. You cannot claim medical expenses on
Form 1040A, U.S. Individual Income Tax Return, or Form
1040EZ, Income Tax Return for Single and Joint Filers
With No Dependents. An example of a filled-in medical
and dental expense part of Schedule A is shown.
How Do You Figure Your Deduction?
To figure your medical and dental expense deduction,
complete lines 1 through 4 of Schedule A, Form 1040, as
follows:
Line 1. Enter the amount you paid for medical expenses
after reducing the amount by payments you received from
insurance and other sources.
Line 2. Enter your AGI from Form 1040, line 38.
Line 3. Multiply the amount on line 2 (AGI) by 7.5% (.075)
and enter the result.
Line 4. If line 3 is more than line 1, enter -0-. Otherwise,
subtract the amount on line 3 from the amount on line 1.
This is your deduction for medical and dental expenses.
Example. Bill and Helen Jones belong to a group
medical plan and part of their insurance is paid by Bill's
employer. They file a joint return, and their AGI is $33,004.
The following list shows the net amounts, after insurance
reimbursements, that Bill and Helen paid this year for
medical expenses.
1. For themselves, Bill and Helen paid $375 for prescrip-
tion medicines and drugs, $337 for hospital bills, $439
for doctor bills, $295 for hospitalization insurance,
$380 for medical and surgical insurance, and $33 for
transportation for medical treatment, which totals
$1,859.
2. For Grace Taylor (Helen's dependent mother), they
paid $300 for doctors, $300 for insulin, and $175 for
eyeglasses, which totals $775.
3. For Betty Jones (Bill's dependent sister), they paid
$450 for doctors and $350 for prescription medicines
and drugs, which totals $800.
Bill and Helen add all their medical and dental expen-
ses together ($1,859 + $775 + $800 = $3,434). They fig-
ure their deduction on the medical and dental expenses
part of Schedule A, Form 1040.
Recordkeeping. For each medical expense, you
should keep a record of:
The name and address of each person you paid, and
The amount and date of each payment.
You can keep a record like the following.
RECORDS
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Record of medical expenses
Name of
person paid
Address of
person paid Amount paid Date paid
Transportation (mileage,
taxi, etc.)
1.
2.
3.
4.
5.
6.
7.
8.
9.
You should also keep a statement or itemized invoice
showing the following.
What medical care was received.
Who received the care.
The nature and purpose of any other medical expen-
ses.
Who the other medical expenses were for.
The amount of the other medical expenses and the
date of payment.
Do not send these records with your return.
Sale of Medical Equipment or
Property
If you deduct the cost of medical equipment or property in
one year and sell it in a later year, you may have a taxable
gain. The taxable gain is the amount of the selling price
that is more than the adjusted basis of the equipment or
property.
The adjusted basis is the portion of the cost of the
equipment or property that you could not deduct because
of the 7.5% limit used to compute the medical deduction.
Use Worksheet D, later, to figure the adjusted basis of the
equipment or property.
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Adjusted Basis of
Medical Equipment or
Property Sold
Worksheet D.
Keep for Your Records
Instructions: Use this worksheet if you deducted the cost of medical
equipment or property in one year and sold the equipment or
property in a later year. This worksheet will give you the adjusted
basis of the equipment or property you sold.
1. Enter the cost of the equipment or
property. ...................... 1.
2. Enter your total includible medical
expenses for the year you included
the cost in your medical
expenses. ..................... 2.
3. Divide line 1 by line 2 ............ 3.
4. Enter 7.5% of your AGI for the year
the cost was included in your
medical expenses ($15,000
x .075). ....................... 4.
5. Multiply line 3 by line 4. If your
allowable itemized deductions for the
year you purchased the equipment
or property were not more than your
AGI for that year, stop here. This is
the adjusted basis of the equipment
or property. If your allowable
itemized deductions for the year you
purchased the equipment or property
were more than your AGI for that
year, complete lines 6 through
11. ........................... 5.
6. Subtract line 5 from line 1 ........ 6.
7. Enter your total allowable itemized
deductions for the year the cost was
included in your medical
expenses. ..................... 7.
8. Divide line 6 by line 7 ............ 8.
9. Enter your AGI for the year the cost
was included in your medical
expenses. ..................... 9.
10. Subtract line 9 from line 7 ........ 10.
11. Multiply line 8 by line 10. ......... 11.
12. Add line 5 to line 11. If your allowable
itemized deductions for the year you
purchased the equipment or property
were more than your AGI for that
year, this is the adjusted basis of the
equipment or property. .......... 12.
Next, use Worksheet E to figure the total gain or loss on
the sale of the medical equipment or property.
Gain or Loss On the
Sale of Medical
Equipment or Property
Worksheet E.
Keep for Your Records
Instructions: Use the following worksheet to figure total gain or
loss on the sale of medical equipment or property that you
deducted in an earlier year.
1. Enter the amount that the medical
equipment or property sold for. ...... 1.
2. Enter your selling expenses ......... 2.
3. Subtract line 2 from line 1 ........... 3.
4. Enter the adjusted basis of the
equipment or property from Worksheet
D, line 5, or line 12, if
applicable. ........................ 4.
5. Subtract line 4 from line 3. This is the
total gain or loss from the sale of the
medical equipment or property. .....5.
If you have a loss, it is not deductible. If you have a
gain, it is includible in your income. The part of the gain
that is a recovery of an amount you previously deducted is
taxable as ordinary income. Enter it on Form 1040,
line 21. Any part of the gain that is more than the recovery
of an amount you previously deducted is taxable as a cap-
ital gain. Enter it on Form 8949, Sales and Other Disposi-
tions of Capital Assets, and Schedule D (Form 1040),
Capital Gains and Losses.
For more information about the recovery of an amount
that you claimed as an itemized deduction in an earlier
year, see Recoveries in Publication 525.
Example. You have a heart condition and difficulty
breathing. Your doctor prescribed oxygen equipment to
help you breathe. Last year, you bought the oxygen equip-
ment for $3,000. You itemized deductions and included it
in your medical expense deduction.
Last year you also paid $10,750 for deductible medical
services and $6,400 for other itemized deductions. Your
AGI was $15,000.
Taking into account the 7.5% limit on medical expen-
ses, your allowable itemized deductions totaled $19,025,
figured as follows:
Oxygen equipment ........................ 3,000
Medical services .......................... 10,750
Total medical expenses ..................... 13,750
7.5% of AGI (.075 × $15,000) .................. −1,125
Allowable medical expense deduction ............ 12,625
Other itemized deductions .................... 6,400
Allowable itemized deductions ................. 19,025
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You figure your adjusted basis as shown on the filled-in
Worksheet D.
Adjusted Basis of
Medical Equipment or
Property
Sold—Illustrated
Worksheet D.
Keep for Your Records
Instructions: Use this worksheet if you deducted the cost of medical
equipment or property in one year and sold the equipment or
property in a later year. This worksheet will give you the adjusted
basis of the equipment or property you sold.
1. Enter the cost of the equipment or
property. ...................... 1. 3,000  
2. Enter your total includible medical
expenses for the year you included
the cost in your medical
expenses. ..................... 2. 13,750  
3. Divide line 1 by line 2 ............ 3. .218  
4. Enter 7.5% of your AGI for the year
the cost was included in your
medical expenses ($15,000
x .075). ....................... 4. 1,125  
5. Multiply line 3 by line 4. If your
allowable itemized deductions for
the year you purchased the
equipment or property were not
more than your AGI for that year,
stop here. This is the adjusted basis
of the equipment or property. If your
allowable itemized deductions for
the year you purchased the
equipment or property were more
than your AGI for that year,
complete lines 6 through 11. ...... 5. 245  
6. Subtract line 5 from line 1 ........ 6. 2,755  
7. Enter your total allowable itemized
deductions for the year the cost was
included in your medical
expenses. ..................... 7. 19,025  
8. Divide line 6 by line 7 ............ 8. .145  
9. Enter your AGI for the year the cost
was included in your medical
expenses. ..................... 9. 15,000  
10. Subtract line 9 from line 7 ........ 10. 4,025  
11. Multiply line 8 by line 10. ......... 11. 584  
12. Add line 5 to line 11. If your
allowable itemized deductions for
the year you purchased the
equipment or property were more
than your AGI for that year, this is
the adjusted basis of the equipment
or property. .................... 12. 829  
This year you sold the oxygen equipment for $2,025
and you had selling expenses of $25. You must report on
this year's tax return part of the $2,000 as ordinary in-
come. To compute the part of the sales price that is taxa-
ble, you must determine the gain by subtracting the total
adjusted basis from the selling price.
Gain or Loss On the
Sale of Medical
Equipment or
Property—Illustrated
Worksheet E.
Keep for Your Records
Instructions: Use the following worksheet to figure gain or loss
on the sale of medical equipment or property that you deducted
in an earlier year.
1. Enter the amount that the medical
equipment or property sold for. ...... 1. 2,025  
2. Enter your selling expenses .........2. 25  
3. Subtract line 2 from line 1 ...........3. 2,000  
4. Enter the adjusted basis of the
equipment or property from Worksheet
D, line 5, or line 12, if
applicable. ........................ 4. 829  
5. Subtract line 4 from line 3. This is the
total gain or loss from the sale of the
medical equipment or property. .....5. 1,171  
Damages for Personal Injuries
If you receive an amount in settlement of a personal injury
suit, part of that award may be for medical expenses that
you deducted in an earlier year. If it is, you must include
that part in your income in the year you receive it to the ex-
tent it reduced your taxable income in the earlier year. See
What If You Receive Insurance Reimbursement in a Later
Year, discussed earlier under How Do You Treat Reim
bursements.
Example. You sued this year for injuries you suffered
in an accident last year. You sought $10,000 for your inju-
ries and did not itemize your damages. Last year, you
paid $500 for medical expenses for your injuries. You de-
ducted those expenses on last year's tax return. This year
you settled your lawsuit for $2,000. Your settlement did
not itemize or allocate the damages. The $2,000 is first
presumed to be for the medical expenses that you deduc-
ted. The $500 is includible in your income this year be-
cause you deducted the entire $500 as a medical ex-
pense deduction last year.
Future medical expenses. If you receive an amount in
settlement of a damage suit for personal injuries, part of
that award may be for future medical expenses. If it is, you
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must reduce any future medical expenses for these inju-
ries until the amount you received has been completely
used.
Example. You were injured in an accident. You sued
and sought a judgment of $50,000 for your injuries. You
settled the suit for $45,000. The settlement provided that
$10,000 of the $45,000 was for future medical expenses
for your injuries. You cannot include the first $10,000 that
you pay for medical expenses for those injuries.
Workers' compensation. If you received workers' com-
pensation and you deducted medical expenses related to
that injury, you must include the workers' compensation in
income up to the amount you deducted. If you received
workers' compensation, but did not deduct medical ex-
penses related to that injury, do not include the workers'
compensation in your income.
Impairment-Related Work
Expenses
If you are a person with disabilities, you can take a busi-
ness deduction for expenses that are necessary for you to
be able to work. If you take a business deduction for these
impairment-related work expenses, they are not subject to
the 7.5% limit that applies to medical expenses.
You have a disability if you have:
A physical or mental disability (for example, blindness
or deafness) that functionally limits your being em-
ployed, or
A physical or mental impairment (for example, a sight
or hearing impairment) that substantially limits one or
more of your major life activities, such as performing
manual tasks, walking, speaking, breathing, learning,
or working.
Impairment-related expenses defined. Impairment-re-
lated expenses are those ordinary and necessary busi-
ness expenses that are:
Necessary for you to do your work satisfactorily,
For goods and services not required or used, other
than incidentally, in your personal activities, and
Not specifically covered under other income tax laws.
Where to report. If you are self-employed, deduct the
business expenses on the appropriate form (Schedule C,
C-EZ, E, or F) used to report your business income and
expenses.
If you are an employee, complete Form 2106, Em-
ployee Business Expenses, or Form 2106-EZ, Unreim-
bursed Employee Business Expenses. Enter on Sched-
ule A (Form 1040), line 28, that part of the amount on
Form 2106, line 10, or Form 2106-EZ, line 6, that is rela-
ted to your impairment. Enter the amount that is unrelated
to your impairment on Schedule A (Form 1040), line 21.
Your impairment-related work expenses are not subject to
the 2%-of-adjusted-gross-income limit that applies to
other employee business expenses.
Example. You are blind. You must use a reader to do
your work. You use the reader both during your regular
working hours at your place of work and outside your reg-
ular working hours away from your place of work. The
reader's services are only for your work. You can deduct
your expenses for the reader as business expenses.
Health Insurance Costs for
Self-Employed Persons
If you were self-employed and had a net profit for the year,
you may be able to deduct, as an adjustment to income,
amounts paid for medical and qualified long-term care in-
surance on behalf of yourself, your spouse, your depend-
ents, and your children who were under age 27 at the end
of 2012. For this purpose, you were self-employed if you
were a general partner (or a limited partner receiving guar-
anteed payments) or you received wages from an S cor-
poration in which you were more than a 2% shareholder.
The insurance plan must be established under your trade
or business and the deduction cannot be more than your
earned income from that trade or business.
You cannot deduct payments for medical insurance for
any month in which you were eligible to participate in a
health plan subsidized by your employer, your spouse's
employer or an employer of your dependent or your child
under age 27 at the end of 2012. You cannot deduct pay-
ments for a qualified long-term care insurance contract for
any month in which you were eligible to participate in a
long-term care insurance plan subsidized by your em-
ployer or your spouse's employer.
If you qualify to take the deduction, use the Self-Em-
ployed Health Insurance Deduction Worksheet in the
Form 1040 instructions to figure the amount you can de-
duct. But if any of the following applies, do not use that
worksheet.
You had more than one source of income subject to
self-employment tax.
You file Form 2555, Foreign Earned Income, or Form
2555-EZ, Foreign Earned Income Exclusion.
You are using amounts paid for qualified long-term
care insurance to figure the deduction.
If you cannot use the worksheet in the Form 1040 instruc-
tions, use the worksheet in Publication 535, Business Ex-
penses, to figure your deduction.
If, during 2012, you were an eligible trade adjustment
assistance (TAA) recipient, alternative TAA (ATAA) recipi-
ent, reemployment TAA (RTAA) recipient, or Pension
Benefit Guaranty Corporation pension recipient, see the
instructions for Form 8885 to figure the amount to enter on
line 1 of the worksheet.
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When figuring the amount you can deduct for insurance
premiums, do not include amounts paid for health insur-
ance coverage with retirement plan distributions that were
tax-free because you are a retired public safety officer.
Where to report. You take this deduction on Form 1040,
line 29. If you itemize your deductions and do not claim
100% of your self-employed health insurance costs on
line 29, include any remaining premiums with all other
medical expenses on Schedule A (Form 1040), subject to
the 7.5% limit.
Child under age 27. If the insurance policy covers your
nondependent child who was under age 27 at the end of
2012, you can claim the premiums for that coverage on
Form 1040, line 29. If you cannot claim 100% of your
self-employed health insurance costs on line 29, any ex-
cess amounts attributable to that child are not eligible to
be claimed on Schedule A (Form 1040).
Generally, family health insurance premiums do not in-
crease if coverage for an additional child is added. If this
is the situation, no allocation would be necessary. If the
premiums did increase (such as where coverage was ex-
panded from single to family to add the non-dependent
child), you can allocate the amount on line 29 to the
non-dependent child and any excess amounts not attribut-
able to that child would be eligible to be claimed on
Schedule A.
Example 1. Naomi is self-employed in 2012 and has
self-only coverage for health insurance. Her premium for
that coverage was $5,000 for the year. She changes to
family coverage only to add her 26-year-old nondepend-
ent child to the plan. Her health insurance premium in-
creases to $10,000 for the year. After completing the
Self-Employed Health Insurance Deduction Worksheet for
Form 1040, line 29, she can only deduct $4,000 on
line 29. The $4,000 is allocable to the nondependent
child. On Schedule A, she can only claim the $5,000 allo-
cable to her coverage. She cannot claim the $1,000 ex-
cess premiums allocable to the nondependent child.
Example 2. The facts are the same as in Example 1,
except that Naomi had family coverage when she added
her 26-year-old nondependent child to the policy. There
was no increase in the $10,000 premium. In this case, she
could claim $4,000 on line 29 and $6,000 on Schedule A.
More information. For more information, see Publication
535.
COBRA Premium Assistance
The Consolidated Omnibus Budget Reconciliation Act of
1985 (COBRA) provides that if you were covered under a
group health plan and you would lose coverage because
of a qualifying event, you should be allowed an opportu-
nity to elect COBRA continuation health coverage under
the plan. If there was no available election, your employer
or the plan was subject to an excise tax. You can be re-
quired to pay the full premium for the COBRA continuation
coverage.
If you are an assistance eligible individual, you pay
35% of the premium otherwise payable for this coverage
and are treated as having paid the full premium. You are
an assistance eligible individual if:
You are a qualified beneficiary as a result of an invol-
untary termination that occurred during the period be-
ginning on September 1, 2008, and ending on May
31, 2010, or had a reduction of hours during that pe-
riod, which was followed by a termination of your em-
ployment that occurred after March 1, 2010, and be-
fore June 1, 2010,
You are eligible for COBRA continuation coverage re-
lated to the qualifying event occurring during the pe-
riod beginning on September 1, 2008, and
You elect the coverage.
A qualified beneficiary is generally any individual who is
covered under a group health plan on the day before the
involuntary termination. This includes the covered em-
ployee, the employee’s spouse, and the employee’s de-
pendent.
The premium assistance (the 65% reduction of the pre-
mium) applies to the first period of coverage beginning af-
ter February 16, 2009. The reduction applies until the ear-
liest of:
1. The first date the assistance eligible individual be-
comes eligible for other group health plan coverage or
Medicare coverage,
2. The date that is 15 months after the first day of the
first month for which the reduced premium applies to
the individual, or
3. The date the individual ceases to be eligible for CO-
BRA continuation coverage.
The premium assistance is not included in your gross
income. However, if your modified adjusted gross income
(AGI) is more than $125,000 ($250,000 if married filing
jointly) but not more than $145,000 ($290,000 if married
filing jointly), your income tax for the year is increased by
a percentage of the premium assistance. Use Worksheet
F to figure the amount you must include as tax on your re-
turn. If your modified AGI is more than $145,000
($290,000 if married filing jointly), your income tax for the
tax year is increased by the total premium assistance. In-
clude the increase in your income tax on Form 1040,
line 60, or Form 1040NR, line 59. On the dotted line next
to that line, enter the amount of the tax and identify it as
“COBRA.”
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Recapture of COBRA
Premium Assistance
for Higher Income
Taxpayers
Worksheet F.
Keep for Your Records
Instructions: Use the following worksheet to figure the taxable
portion of your COBRA premium if your modified AGI (line 3
below) is more than $125,000 ($250,000 if married filing jointly)
but less than $145,000 ($290,000 if married filing jointly).
1. Enter your AGI (Form 1040, line 38 or
Form 1040NR, line 36) ............. 1.
2. Enter the total of any amounts from
Form 2555, lines 45 and 50; Form
2555-EZ, line 18; and Form 4563,
line 15, and any exclusion of income
from American Samoa and Puerto
Rico .............................. 2.
3. Modified AGI. Add lines 1 and 2 ...... 3.
4. Enter $125,000 ($250,000 if married
filing jointly) ....................... 4.
5. Subtract line 4 from line 3 ........... 5.
6. Enter $20,000 ($40,000 if married filing
jointly) ............................ 6.
7. Divide line 5 by line 6. Enter the result
as a decimal (rounded to at least 3
places) ........................... 7. .
8. Enter the amount of the COBRA
premium assistance* you received in
2012 ............................. 8.
9. Multiply line 8 by line 7. Enter result
here and include it on Form 1040,
line 60 or Form 1040NR, line 59. On
the dotted line next to that line, enter
the amount shown on line 9 and
identify it as “COBRA.” .............. 9.
*Contact your former employer or health insurance plan to
obtain the total premium assistance, if unknown.
You may elect to permanently waive the right to the
premium assistance. You will not receive the premium as-
sistance and you will not have to include the assistance in
your income tax if your modified AGI is more than
$125,000 ($250,000 if married filing jointly). To make this
election, give a signed and dated notification (include a
reference to “permanent waiver”) to the person to whom
premiums are payable.
You will not qualify for the health coverage tax credit
(discussed next) for any month for which you receive pre-
mium assistance.
For more information see Notice 2009-27, available at
www.irs.gov/irb/200916_irb/ar09.
Health Coverage Tax Credit
If you paid the premiums for qualified health insurance
coverage, you may be able to claim the health coverage
tax credit (HCTC). If you are eligible, you can get monthly
HCTC (advance payments), a yearly HCTC, or a combi-
nation of these methods (see How To Take the Credit,
later). The HCTC is 72.5% of the payments made in 2012.
More information. For a complete discussion of the
HCTC, visit IRS.gov and enter “HCTC” in the search box.
Also, see Form 8885.
Who Can Take This Credit?
You can take this credit for any month in which all of the
following were true on the first day of the month.
1. You were an eligible:
a. Trade adjustment assistance (TAA) recipient,
b. Alternative TAA recipient,
c. Reemployment TAA recipient,
d. Pension Benefit Guaranty Corporation (PBGC)
pension payee, or
e. You were a qualifying family member of an individ-
ual described in a, b, c, or d when he or she enrol-
led in Medicare, died, or got divorced. See Family
members in certain life events (enrollment in Medi
care, death, or divorce), later.
2. You paid the premium for qualified health insurance
coverage for yourself or a qualifying family member.
See Qualified Health Insurance, later.
3. You were not imprisoned under federal, state, or local
authority.
4. You did not have other specified coverage. See Other
Specified Coverage, later.
If you were an eligible individual described in 1a, 1b, 1c,
or 1d, your state’s workforce agency (unemployment of-
fice) or the PBGC will notify the HCTC Program that you
may be eligible for the credit. When notified, the HCTC
Program will mail you an HCTC Eligibility Kit. If you have
not received the Eligibility Kit, you may not be an eligible
individual and not qualify for the credit. If you believe you
are eligible for the HCTC and have not received an Eligi-
bility Kit, go to IRS.gov and enter “HCTC” in the search
box for information on how to contact the HCTC Program.
It can take the state or PBGC time to notify the
HCTC Program about the event. You should
make the full premium payments to your health
plan until you are enrolled in the HCTC Program. You may
be able to claim the yearly HCTC for these premiums
when you file your tax return.
CAUTION
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No credit if dependent of another taxpayer. You can-
not take this credit if you can be claimed as a dependent
on someone else's tax return.
Qualifying Family Member
You can include the premiums you pay for qualified health
insurance for qualifying family members in figuring your
credit. A qualifying family member is:
Your spouse (but see Both spouses eligible below), or
Anyone whom you can claim as a dependent on your
tax return. (For children whose parents are divorced,
see Children of divorced or separated parents, later.)
However, anyone who has other specified coverage (de-
fined later) is not a qualifying family member.
Both spouses eligible. Your spouse is not treated as a
qualifying family member if all of the following are true.
You are married at the end of the year.
You and your spouse are both eligible recipients dur-
ing the year.
You file separate tax returns.
Married and living apart. For purposes of this credit,
you are not considered married on the last day of the year
if all of the following apply.
You file a separate return.
Your home is the home for more than half the year of a
dependent under age 13 or a dependent who is physi-
cally or mentally not able to care for himself or herself.
You pay more than half the cost of keeping up your
home for the year.
Your spouse does not live in your home for the last 6
months of the year.
Legally separated. You are not considered married if
you are legally separated from your spouse under a de-
cree of divorce or separate maintenance.
Children of divorced or separated parents. Under the
rules for medical expenses, a child of divorced or separa-
ted parents can be treated as a dependent of both parents
if certain requirements are met. See Qualifying Child un-
der Whose Medical Expenses Can You Include, earlier.
However, for purposes of the HCTC, only the custodial
parent can treat the child as a qualifying family member,
even if the other parent can claim the child as a depend-
ent. The custodial parent is the parent having custody for
the greater portion of the tax year.
Family members in certain life events (enrollment in
Medicare, death, or divorce). Qualifying family mem-
bers (spouses and dependents) are considered recipients
and are eligible to receive the HCTC in the event that the
TAA, ATAA, RTAA recipient or PBGC payee enrolls in
Medicare, dies, or gets divorced. Qualifying family mem-
bers can receive the tax credit for up to 24 months from
the month of the event, or until January 1, 2014, which-
ever comes first. Eligible taxpayers who plan to claim this
credit because of these life events must call the HCTC
Program prior to filing Form 8885 to ensure the form is
processed correctly. See Statequalified health insurance,
later, for the phone number.
Qualified Health Insurance
The following health insurance qualifies for the credit.
COBRA continuation coverage. (This is coverage that
employers with 20 or more employees must offer to
employees or former employees and their beneficia-
ries who have lost coverage because of certain
events.) See the caution below.
Coverage under a group health plan that is available
through the employment of your spouse. (But see
Other Specified Coverage, later.)
Coverage under a non-group (individual) health insur-
ance plan, if the first day of your coverage started at
least 30 days before you left your job that qualified you
for TAA, ATAA, RTAA, or PBGC benefits, or the date
of Medicare enrollment, death of or divorce from the
original TAA recipient or PBGC payee that provided
you with extended eligibility as a qualified family mem-
ber. Individual health insurance does not include any
insurance connected with a group health plan of fed-
eral or state based health insurance coverage.
COBRA continuation coverage allows individuals
who had lost their jobs to receive a reduction in
health insurance premiums. You do not qualify
for the HCTC for any month that you received a reduction
in premium.
Voluntary Employee's Beneficiary Association
(VEBA) A health plan purchased through a VEBA that
was established through the bankruptcy of your former
employer.
State-qualified health insurance. Certain state quali-
fied health insurance can qualify for a credit. To find out
which plans are qualified for your state, you can:
Visit IRS.gov, and type “hctc” in the search box, and
then, click on HCTC: List of StateQualified Health
Plans, or
You can call 1-866-628-4282 (tollfree) (or TTY/TDD
1-866-626-4282).
Nonqualified Health Insurance
The following health insurance does not qualify for the
credit.
1. Medicare supplemental (Medigap) insurance, Tricare
supplemental insurance, or similar supplemental in-
surance to an employer-sponsored group health plan.
2. Any insurance if substantially all of the coverage is:
a. Coverage for on-site medical clinics,
CAUTION
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b. Hospital indemnity or other fixed indemnity insur-
ance,
c. Accident or disability income insurance (or a com-
bination of the two),
d. Liability insurance,
e. A supplement to liability insurance,
f. Workers' compensation or similar insurance,
g. Automobile medical payment insurance,
h. Credit-only insurance,
i. Limited scope dental or vision benefits,
j.
Benefits for long-term care, nursing home care,
home health care, community-based care (or any
combination), or
k.
Coverage for only a specified disease or illness.
3. Coverage under a flexible spending or similar ar-
rangement.
Insurance that covers other individuals. If you have
qualified health insurance that covers anyone besides
yourself and your qualifying family member(s) (defined
earlier), you may not be able to take into account all of
your payments. You cannot treat an amount as paid for in-
surance for yourself and qualifying family members unless
all of the following requirements are met.
The charge for insurance for yourself and qualifying
family members is either separately stated in the con-
tract or furnished to you by the insurance company in
a separate statement.
The amount you paid for insurance for yourself and
qualifying family members is not more than the charge
that is stated in the contract or furnished by the insur-
ance company.
The amount stated in the contract or furnished by the
insurance company is not unreasonably large in rela-
tion to the total charges under the contract.
Eligible Coverage Month
Eligibility for the credit is determined on a monthly basis.
An eligible coverage month is any month in which, as of
the first day of the month, you:
1. Are an eligible recipient or a qualified family member
in certain life events (defined earlier),
2. Are covered by qualified health insurance (defined
earlier) that you pay for,
3. Do not have other specified coverage (defined later),
and
4. Are not imprisoned under federal, state, or local au-
thority.
If you file a joint return, only one spouse has to satisfy
the requirements.
COBRA premium assistance. An individual who re-
ceives COBRA premium assistance (discussed earlier) for
a month is disqualified from receiving the HCTC for that
month.
Other Specified Coverage
Even if you or your qualifying family member are other-
wise eligible, you or your qualifying family member are not
eligible for the credit for a month if, as of the first day of the
month, you or your qualifying family member have other
specified coverage. Other specified coverage is coverage
under the following.
1. Any insurance which constitutes medical care (unless
substantially all of that insurance is for benefits listed
earlier under (1) or (2) under Nonqualified Health In
surance) if at least 50% of the cost of the coverage is
paid by an employer (or former employer) of you or
your spouse.
2. Any of the following government health programs:
a. Medicare Part A, B, or C,
b. Medicaid, or the Children's Health Insurance Pro-
gram (CHIP),
c. The Federal Employees Health Benefit Program
(FEHBP), or
d. Tricare, the medical and dental care program for
members and certain former members of the uni-
formed services and their dependents.
Benefits from the Veterans Administration. Entitle-
ment to or receipt of benefits from the Veterans Adminis-
tration is not other specified coverage.
How To Take the Credit
If you claim this credit, you cannot take the same expen-
ses that you use to figure your HCTC into account in de-
termining your:
Medical and dental expenses on Schedule A (Form
1040), or
Self-employed health insurance deduction.
You cannot use payments you made with funds from
the following accounts to figure the credit:
Health Savings Accounts (HSAs), or
Archer Medical Savings Accounts (MSAs).
Yearly HCTC
The HCTC is 72.5% for payments made in 2012. To claim
the yearly HCTC, complete Form 8885, and attach it to
your Form 1040, Form 1040NR, U.S. Nonresident Alien
Income Tax Return; Form 1040-SS, U.S. Self-Employ-
ment Tax Return; or Form 1040-PR, Planilla para la De-
claración de la Contribución Federal sobre al Trabajo por
Cuenta Propia. You cannot claim the credit on Form
Publication 502 (2012) Page 29
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1040A, Form 1040EZ, or Form 1040NR-EZ, U.S. Income
Tax Return for Certain Nonresident Aliens With No De-
pendents.
You may claim the yearly HCTC if you were an eligible
recipient and:
Did not receive monthly HCTC (advanced payments),
or
Received advanced payments and also made eligible
payments directly to your health plan.
Required documents. You must attach to your tax re-
turn the documents listed in the Form 8885 instructions.
If you efile, you must attach a copy of Form 8885 and
the required documents to Form 8453, U.S. Individual In-
come Tax Transmittal for an IRS efile Return. Mail Form
8453 and the attachments to the address shown in the
Form 8453 instructions.
Refundable credit. The HCTC is refundable. You can
claim the full credit even if you do not owe any taxes or
earn any income. To get the credit, you must:
1. Qualify for the credit, and
2. File a tax return, even if you:
a. Do not owe any tax,
b. Did not earn enough money to file a return, or
c. Did not have income taxes withheld from your pay.
Monthly HCTC
Under monthly HCTC (advance payments), you only pay
part of the premium for health insurance and the HCTC
Program pays the rest of the premium. The part paid by
the HCTC Program is your monthly HCTC.
You pay your part of the premium to the HCTC Pro-
gram. The program adds the advance payment and pays
the total premium to your health plan.
If you want to receive the monthly HCTC, you must fill
out the registration form and send it and any supporting
documents to the HCTC Program. Once you are enrolled
in the HCTC Program, you will receive a monthly invoice
stating the amount you must pay to the program and the
due date.
If you receive a monthly HCTC, you will get Form
1099-H, Health Coverage Tax Credit (HCTC) Advance
Payments. The form shows you the total of your advance
payments and for which months payments were made (in-
cluding months for which reimbursement credits were
paid to you). You cannot claim the yearly HCTC for any
month for which you received a monthly HCTC.
How To Get Tax Help
You can get help with unresolved tax issues, order free
publications and forms, ask tax questions, and get
information from the IRS in several ways. By selecting the
method that is best for you, you will have quick and easy
access to tax help.
Free help with your tax return. Free help in preparing
your return is available nationwide from IRS-certified vol-
unteers. The Volunteer Income Tax Assistance (VITA)
program is designed to help low-moderate income, eld-
erly, disabled, and limited English proficient taxpayers.
The Tax Counseling for the Elderly (TCE) program is de-
signed to assist taxpayers age 60 and older with their tax
returns. Most VITA and TCE sites offer free electronic fil-
ing and all volunteers will let you know about credits and
deductions you may be entitled to claim. Some VITA and
TCE sites provide taxpayers the opportunity to prepare
their return with the assistance of an IRS-certified volun-
teer. To find the nearest VITA or TCE site, visit IRS.gov or
call 1-800-906-9887 or 1-800-829-1040.
As part of the TCE program, AARP offers the Tax-Aide
counseling program. To find the nearest AARP Tax-Aide
site, visit AARP's website at www.aarp.org/money/taxaide
or call 1-888-227-7669.
For more information on these programs, go to IRS.gov
and enter “VITA” in the search box.
Internet. You can access the IRS website at
IRS.gov 24 hours a day, 7 days a week to:
Efile your return. Find out about commercial tax prep-
aration and efile services available free to eligible tax-
payers.
Check the status of your 2012 refund. Go to IRS.gov
and click on Where’s My Refund. Information about
your return will generally be available within 24 hours
after the IRS receives your e-filed return, or 4 weeks
after you mail your paper return. If you filed Form 8379
with your return, wait 14 weeks (11 weeks if you filed
electronically). Have your 2012 tax return handy so
you can provide your social security number, your fil-
ing status, and the exact whole dollar amount of your
refund.
Where's My Refund? has a new look this year! The
tool will include a tracker that displays progress
through three stages: (1) return received, (2) refund
approved, and (3) refund sent. Where's My Refund?
will provide an actual personalized refund date as
soon as the IRS processes your tax return and appro-
ves your refund. So in a change from previous filing
seasons, you won't get an estimated refund date right
away. Where's My Refund? includes information for
the most recent return filed in the current year and
does not include information about amended returns.
You can obtain a free transcript online at IRS.gov by
clicking on Order a Return or Account Transcript un-
der “Tools.” For a transcript by phone, call
1-800-908-9946 and follow the prompts in the recor-
ded message. You will be prompted to provide your
SSN or Individual Taxpayer Identification Number
(ITIN), date of birth, street address and ZIP code.
Page 30 Publication 502 (2012)
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Download forms, including talking tax forms, instruc-
tions, and publications.
Order IRS products.
Research your tax questions.
Search publications by topic or keyword.
Use the Internal Revenue Code, regulations, or other
official guidance.
View Internal Revenue Bulletins (IRBs) published in
the last few years.
Figure your withholding allowances using the IRS
Withholding Calculator at www.irs.gov/individuals.
Determine if Form 6251 (Alternative Minimum Tax—
Individuals), must be filed by using our Alternative
Minimum Tax (AMT) Assistant available at IRS.gov by
typing Alternative Minimum Tax Assistant in the
search box.
Sign up to receive local and national tax news by
email.
Get information on starting and operating a small busi-
ness.
Phone. Many services are available by phone.
Ordering forms, instructions, and publications. Call
1-800-TAX-FORM (1-800-829-3676) to order cur-
rent-year forms, instructions, and publications, and
prior-year forms and instructions (limited to 5 years).
You should receive your order within 10 days.
Asking tax questions. Call the IRS with your tax ques-
tions at 1-800-829-1040.
Solving problems. You can get face-to-face help solv-
ing tax problems most business days in IRS Taxpayer
Assistance Centers (TAC). An employee can explain
IRS letters, request adjustments to your account, or
help you set up a payment plan. Call your local Tax-
payer Assistance Center for an appointment. To find
the number, go to www.irs.gov/localcontacts or look in
the phone book under United States Government, In
ternal Revenue Service.
TTY/TDD equipment. If you have access to TTY/TDD
equipment, call 1-800-829-4059 to ask tax questions
or to order forms and publications. The TTY/TDD tele-
phone number is for individuals who are deaf, hard of
hearing, or have a speech disability. These individuals
can also access the IRS through relay services such
as the Federal Relay Service at www.gsa.gov/
fedrelay.
TeleTax topics. Call 1-800-829-4477 to listen to
pre-recorded messages covering various tax topics.
Checking the status of your 2012 refund. To check the
status of your 2012 refund, call 1-800-829-1954 or
1-800-829-4477 (automated Where's My Refund? in-
formation 24 hours a day, 7 days a week). Information
about your return will generally be available within 24
hours after the IRS receives your e-filed return, or 4
weeks after you mail your paper return. If you filed
Form 8379 with your return, wait 14 weeks (11 weeks
if you filed electronically). Have your 2012 tax return
handy so you can provide your social security num-
ber, your filing status, and the exact whole dollar
amount of your refund. Where's My Refund? will pro-
vide an actual personalized refund date as soon as
the IRS processes your tax return and approves your
refund. Where's My Refund? includes information for
the most recent return filed in the current year and
does not include information about amended returns.
Evaluating the quality of our telephone services. To
ensure IRS representatives give accurate, courteous, and
professional answers, we use several methods to evalu-
ate the quality of our telephone services. One method is
for a second IRS representative to listen in on or record
random telephone calls. Another is to ask some callers to
complete a short survey at the end of the call.
Walk-in. Some products and services are availa-
ble on a walk-in basis.
Products. You can walk in to some post offices, libra-
ries, and IRS offices to pick up certain forms, instruc-
tions, and publications. Some IRS offices, libraries,
and city and county government offices have a collec-
tion of products available to photocopy from reprodu-
cible proofs. Also, some IRS offices and libraries have
the Internal Revenue Code, regulations, Internal Rev-
enue Bulletins, and Cumulative Bulletins available for
research purposes.
Services. You can walk in to your local TAC most
business days for personal, face-to-face tax help. An
employee can explain IRS letters, request adjust-
ments to your tax account, or help you set up a pay-
ment plan. If you need to resolve a tax problem, have
questions about how the tax law applies to your indi-
vidual tax return, or you are more comfortable talking
with someone in person, visit your local TAC where
you can talk with an IRS representative face-to-face.
No appointment is necessary—just walk in. Before
visiting, check www.irs.gov/localcontacts for hours of
operation and services provided. If you have an ongo-
ing, complex tax account problem or a special need,
such as a disability, an appointment can be requested
by calling your local TAC. You can leave a message
and a representative will call you back within 2 busi-
ness days. All other issues will be handled without an
appointment. To call your local TAC, go to
www.irs.gov/localcontacts or look in the phone book
under United States Government, Internal Revenue
Service.
Publication 502 (2012) Page 31
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Mail. You can send your order for forms, instruc-
tions, and publications to the address below. You
should receive a response within 10 days after
your request is received.
Internal Revenue Service
1201 N. Mitsubishi Motorway
Bloomington, IL 61705-6613
Taxpayer Advocate Service. The Taxpayer Advocate
Service (TAS) is your voice at the IRS. Its job is to ensure
that every taxpayer is treated fairly, and that you know and
understand your rights. TAS offers free help to guide you
through the often-confusing process of resolving tax prob-
lems that you haven’t been able to solve on your own. Re-
member, the worst thing you can do is nothing at all.
TAS can help if you can’t resolve your problem with the
IRS and:
Your problem is causing financial difficulties for you,
your family, or your business.
You face (or your business is facing) an immediate
threat of adverse action.
You have tried repeatedly to contact the IRS but no
one has responded, or the IRS has not responded to
you by the date promised.
If you qualify for help, they will do everything they can
to get your problem resolved. You will be assigned to one
advocate who will be with you at every turn. TAS has offi-
ces in every state, the District of Columbia, and Puerto
Rico. Although TAS is independent within the IRS, their
advocates know how to work with the IRS to get your
problems resolved. And its services are always free.
As a taxpayer, you have rights that the IRS must abide
by in its dealings with you. The TAS tax toolkit at
www.TaxpayerAdvocate.irs.gov can help you understand
these rights.
If you think TAS might be able to help you, call your lo-
cal advocate, whose number is in your phone book and on
our website at www.irs.gov/advocate. You can also call
the toll-free number at 1-877-777-4778. Deaf and hard of
hearing individuals who have access to TTY/TDD equip-
ment can call 1-800-829-4059. These individuals can also
access the IRS through relay services such as the Federal
Relay Service at www.gsa.gov/fedrelay.
TAS also handles large-scale or systemic problems
that affect many taxpayers. If you know of one of these
broad issues, please report it through the Systemic Advo-
cacy Management System at www.irs.gov/advocate.
Low Income Taxpayer Clinics (LITCs). Low Income
Taxpayer Clinics (LITCs) are independent from the IRS.
Some clinics serve individuals whose income is below a
certain level and who need to resolve a tax problem.
These clinics provide professional representation before
the IRS or in court on audits, appeals, tax collection dis-
putes, and other issues for free or for a small fee. Some
clinics can provide information about taxpayer rights and
responsibilities in many different languages for individuals
who speak English as a second language. For more infor-
mation and to find a clinic near you, see the LITC page on
www.irs.gov/advocate or IRS Publication 4134, Low In
come Taxpayer Clinic List. This publication is also availa-
ble by calling 1-800-TAX-FORM (1-800-829-3676) or at
your local IRS office.
Free tax services. Publication 910, IRS Guide to Free
Tax Services, is your guide to IRS services and resour-
ces. Learn about free tax information from the IRS, includ-
ing publications, services, and education and assistance
programs. The publication also has an index of over 100
TeleTax topics (recorded tax information) you can listen to
on the telephone. The majority of the information and
services listed in this publication are available to you free
of charge. If there is a fee associated with a resource or
service, it is listed in the publication.
Accessible versions of IRS published products are
available on request in a variety of alternative formats for
people with disabilities.
DVD for tax products. You can order Publica-
tion 1796, IRS Tax Products DVD, and obtain:
Current-year forms, instructions, and publications.
Prior-year forms, instructions, and publications.
Tax Map: an electronic research tool and finding aid.
Tax law frequently asked questions.
Tax Topics from the IRS telephone response system.
Internal Revenue Code—Title 26 of the U.S. Code.
Links to other Internet-based tax research materials.
Fill-in, print, and save features for most tax forms.
Internal Revenue Bulletins.
Toll-free and email technical support.
Two releases during the year.
– The first release will ship the beginning of January
2013.
– The final release will ship the beginning of March
2013.
Purchase the DVD from National Technical Information
Service (NTIS) at www.irs.gov/cdorders for $30 (no han-
dling fee) or call 1-877-233-6767 toll free to buy the DVD
for $30 (plus a $6 handling fee).
Page 32 Publication 502 (2012)
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To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
Index
A
Abortion .................................... 5
Acupuncture .............................. 5
Adopted child's medical
expenses .............................. 4
AGI limitation ......................... 2, 3
Alcoholism ............................... 5
Ambulances ............................. 5
Archer MSAs:
Health coverage tax credit ........ 29
Medical expenses paid for
decedent from ..................... 5
Artificial limbs ............................ 5
Artificial teeth ........................... 6
Aspirin ................................... 17
Assistance (See Tax help)
Assisted living homes .............. 12
Athletic club dues ................... 16
Autoette ................................. 15
Automobiles (See Cars)
B
Baby sitting ............................ 15
Bandages .................................. 6
Basis:
Medical equipment or property
(Worksheet D) .................... 23
Birth control pills ....................... 6
Body scan ................................ 6
Braille books and magazines ...... 6
Breast pumps and supplies ........ 6
Breast reconstruction surgery .... 6
C
Calculation of deduction .......... 21
Capital expenses ........................ 6
Improvements to rented
property ............................. 7
Operation and upkeep .............. 7
Worksheet A ............................ 7
Cars ........................................ 7
Out-of-pocket expenses .......... 14
Standard medical mileage
rates ............................... 14
Child care ............................... 15
Children's medical expenses:
Adopted child ......................... 4
Dependents ............................ 3
Chiropractor ............................. 8
Christian Scientist practitioner .... 8
Chronically ill persons ............. 11
COBRA assistance:
Recapture of COBRA premium
assistance ........................ 27
COBRA premium assistance ...... 26
Community property states ........ 3
Computer banks to track medical
information .......................... 12
Contact lenses .......................... 8
Controlled substances .............. 15
Cosmetic surgery .................... 16
Credit (See Health coverage tax
credit)
Crutches .................................. 8
D
Dancing lessons ..................... 16
Decedent's medical expenses ..... 5
Deductible amount .................... 3
Deductible expenses ............ 3, 15
Definition of medical expenses:
Doctor .................................... 2
Physician ............................... 2
Dental treatment ....................... 8
Artificial teeth .......................... 6
Teeth whitening ..................... 17
Dentures .................................. 6
Dependent's medical expenses:
Adopted child ......................... 4
Multiple support agreement ........ 4
Qualifying child ........................ 3
Qualifying relative .................... 3
Dependents:
Disabled dependent care ...... 8, 11
Diagnostic devices .................... 8
Diaper services ....................... 16
Disabilities, persons with:
Dependent care expenses .... 8, 11
Improvements to rented
property ............................. 7
Special education .................. 13
Divorced taxpayers:
Medical expenses of child .......... 4
Drug addiction .......................... 8
Drugs (See Medicines)
Dues:
Health club ........................... 16
E
Education, special ................... 13
Electrolysis ............................ 16
Employer-sponsored health
insurance plans ...................... 9
Employment taxes ................... 13
Equipment (See Medical equipment
or property)
Excluded expenses:
Insurance premiums ................ 10
Eyeglasses ................................ 8
Eye surgery .............................. 8
F
Fertility enhancement:
Eggs, temporary storage of ........ 8
Fertility .................................. 8
In vitro fertilization .................... 8
Figuring the deduction ........ 21, 22
Final return for decedent:
Medical expenses paid .............. 5
Flexible spending account ........ 16
Food (See Weight-loss programs)
Form 1040:
Form 1040, Schedule A:
Impairment-related work
expenses ......................... 25
Medical and dental
expenses ...................... 2, 21
Self-employed persons, health
insurance costs .................. 25
Form 1040, Schedule C:
Impairment-related work
expenses ......................... 25
Form 1040, Schedule C-EZ:
Impairment-related work
expenses ......................... 25
Form 1040, Schedule E:
Impairment-related work
expenses ......................... 25
Form 1040, Schedule F:
Impairment-related work
expenses ......................... 25
Health coverage tax credit ........ 29
Self-employed persons, health
insurance costs .................. 25
Form 1040NR:
Health coverage tax credit ........ 29
Form 1040X:
Amended return ...................... 3
Deceased taxpayer .................. 5
Form 1099-H:
Self-employed persons, health
insurance costs .................. 25
Form 2106:
Impairment-related work
expenses ......................... 25
Form 2106-EZ:
Impairment-related work
expenses ......................... 25
Form 2555:
Self-employed persons, health
insurance costs .................. 25
Form 2555-EZ:
Self-employed persons, health
insurance costs .................. 25
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Form 8453:
Health coverage tax credit ........ 29
Form 8885:
Health coverage tax credit ........ 29
Self-employed persons, health
insurance costs .................. 25
Founder's fee (See Lifetime care,
advance payments)
Free tax services ..................... 30
Funeral expenses .................... 16
Future medical care ............ 11, 16
G
Glasses .................................... 8
Guide dog or other animal .......... 8
H
Hair:
Removal .............................. 16
Transplants .......................... 16
Wigs ................................... 15
Health club dues ...................... 16
Health coverage tax credit ........ 16
Health Coverage Tax Credit:
Advanced payments ............... 30
Alternative TAA recipient ......... 27
Alternative TAA recipient ......... 27
Archer MSAs ........................ 29
Both spouses eligible .............. 28
Children of divorced
parents ....................... 27, 28
Eligible coverage month .......... 29
Insurance that covers other
individuals ........................ 29
Legally separated .................. 28
Married persons filing separate
returns ............................. 28
Monthly HCTC ...................... 30
Nonqualified health
insurance .......................... 28
Other specified coverage:
Benefits from the Veterans
Administration ................ 29
PBGC pension payee ............. 27
Pension Benefit Guaranty
Corporation (PBGC)
recipient ........................... 27
Qualified health insurance ........ 28
Qualifying family member ......... 28
Reimbursement credit ............. 30
Reporting ............................. 29
State-qualified health
insurance .......................... 28
TAA recipient ........................ 27
TAA recipient ........................ 27
Yearly HCTC ........................ 29
Health institutes ........................ 9
Health insurance:
Credit (See Health coverage tax
credit)
Employer-sponsored plan .......... 9
Premiums:
Deductible .......................... 9
Nondeductible ................... 10
Paid by employer ............... 19
Paid by employer and you .... 18
Paid by you ....................... 18
Prepaid ............................ 10
Unused sick leave used to
pay .............................. 10
Reimbursements (See Reimbursem
ents)
Self-employed persons ........... 25
Health maintenance organizations
(HMOs) .................................. 9
Health reimbursement
arrangements (HRAs) ........... 18
Health savings accounts (HSAs):
Payments from ...................... 16
Hearing aids ............................. 9
Hearing-impaired persons:
Guide dog or other animal for ...... 8
Help (See Tax help)
HMOs (Health maintenance
organizations) ....................... 9
Home care (See Nursing services)
Home improvements (See Capital
expenses:)
Hospital services ....................... 9
Hotels .................................... 11
Household help ....................... 16
HRAs (Health reimbursement
arrangements) ..................... 18
I
Illegal operations and
treatments .......................... 16
Illegal substances ................... 15
Impairment-related work
expenses ............................ 25
Reporting of ......................... 25
Insulin ................................... 17
Insurance (See Health insurance)
Intellectually and developmentally
disabled persons:
Mentally retarded ................... 10
Special homes for .................. 10
L
Laboratory fees ....................... 10
Lactation expenses (See Breast
pumps and supplies)
Laser eye surgery ...................... 8
Lead-based paint removal ........ 10
Learning disabilities ................ 13
Legal fees .............................. 11
Lessons, dancing and
swimming ............................ 16
Lifetime care:
Advance payments for ............ 11
Lodging (See also Trips) ....... 11, 15
Long-term care ....................... 11
Chronically ill individuals .......... 11
Maintenance and personal care
services ............................ 12
Qualified insurance contracts .... 12
Qualified services .................. 11
M
Maintenance and personal care
services ............................. 12
Maternity clothes ..................... 17
Meals (See also Weight-loss
programs) ....................... 12, 15
Medical conferences ................ 12
Medical equipment or property:
Adjusted basis (Worksheet
D) ................................... 23
Gain or loss (Worksheet E) ....... 24
Sale of ................................ 22
Medical expense records .......... 21
Medical information plans ........ 12
Medical savings accounts
(MSAs) ................................ 17
Medicare:
Medicare A, deductible
expense .............................. 9
Medicare B, deductible
expense ........................... 10
Medicare D, deductible
expense ........................... 10
Medicines ............................... 12
Imported ......................... 12, 17
Nonprescription drugs and
medicines ......................... 17
Missing children, photographs of in
IRS publications .................... 1
More information (See Tax help)
Multiple support agreement ........ 4
N
Nondeductible expenses ..... 15, 17
Nonprescription drugs and
medicines ........................... 17
Nursing homes ....................... 12
Nursing services ................ 12, 15
Chronically ill individuals .......... 11
Nutritional supplements:
Natural medicines .................. 17
O
Operations .............................. 13
Cosmetic surgery ................... 16
Eye surgery ............................ 8
Illegal operations and
treatments ........................ 16
Optometrist ............................ 13
Optometrist services ................. 8
Organ donors ......................... 14
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Osteopath .............................. 13
Oxygen .................................. 13
P
Paint removal, for lead-based .... 10
Parking fees and tolls .............. 14
Personal injury damages .......... 24
Personal use items .................. 17
Photographs of missing children in
IRS publications .................... 1
Physical examination ............... 13
Physical therapy ..................... 14
Plastic surgery ........................ 16
Pregnancy test kit ................... 13
Premiums (See Health insurance)
Prepaid insurance premiums .... 10
Prosthesis ................................ 5
Psychiatric care ...................... 13
Psychoanalysis ....................... 13
Psychologists ......................... 13
Publications (See Tax help)
R
Radial keratotomy ..................... 8
Recordkeeping ....................... 21
Rehabilitation facilities ............. 12
Reimbursements ................ 17, 21
Excess includible in income:
More than one policy (Worksheet
C) ................................ 20
One policy (Worksheet B) ..... 19
Excess may be taxable (Figure
1) .................................... 18
Health Reimbursement
Arrangement (HRA) ............ 18
Insurance ........................ 17, 18
Medical expenses not
deducted .......................... 20
More than one policy .............. 19
Received in later year ............. 21
Rental property:
Improvements to ...................... 7
Reporting:
Health coverage tax credit ........ 29
Impairment-related work
expenses ......................... 25
Medical and dental expenses ... 21
Medical deduction (See Form 1040,
Schedule A)
Self-employed persons, health
insurance costs .................. 25
S
Sale of medical equipment or
property ............................. 22
Adjusted basis (Worksheet
D) ................................... 23
Gain or loss (Worksheet E) ....... 24
Schedules (See Form 1040)
Seeing-eye dogs ....................... 8
Self-employed persons:
Health coverage tax credit ........ 29
Health insurance costs ............ 25
Senior housing ....................... 12
Separated taxpayers:
Health coverage tax credit ........ 28
Medical expenses of child .......... 4
Separate returns:
Community property states ......... 3
Medical and dental expenses ..... 3
Service animals ........................ 8
Sick leave:
Used to pay health insurance
premiums .......................... 10
Special education .................... 13
Spouse's medical expenses ........ 3
Deceased spouse .................... 5
Sterilization ............................ 14
Stop-smoking programs ........... 14
Surgery (See Operations)
Swimming lessons .................. 16
T
Tables and figures:
Medical equipment or property:
Adjusted basis (Worksheet
D) ................................ 23
Gain or loss (Worksheet E) .... 24
Reimbursements, excess includible
in income:
More than one policy (Worksheet
C) ................................ 20
One policy (Worksheet B) ..... 19
Reimbursements, excess may be
taxable (Figure 1) ................ 18
Tax help ................................. 30
Taxpayer Advocate .................. 32
Teeth:
Artificial ................................. 6
Dental treatment ...................... 8
Whitening ............................ 17
Telephone .............................. 14
Television .............................. 14
Therapy ................................. 14
Transplants ............................ 14
Travel and transportation
expenses ............................ 14
Car expenses ....................... 14
Includible expenses ........... 14, 15
Parking fees and tolls .............. 14
Trips ...................................... 15
TTY/TDD information ............... 30
Tuition .................................... 15
V
Vasectomy ............................. 15
Veterinary fees ........................ 17
Vision correction surgery ........... 8
Visually impaired persons:
Guide dog or other animal for ...... 8
Vitamins or minerals ................ 17
Voluntary Employee's Beneficiary
Association (VEBA):
Qualified health insurance ........ 28
W
Weight-loss programs ......... 15, 17
What's new:
COBRA continuous coverage ..... 1
Health coverage tax credit .......... 1
Standard medical mileage rate .... 1
Wheelchairs ........................... 15
Wigs ...................................... 15
Workers' compensation ........... 25
Work expenses:
Disabled dependent care ............ 8
Impairment-related ................. 25
Worksheets:
Capital expenses (Worksheet
A) ..................................... 7
Medical equipment or property:
Adjusted basis (Worksheet
D) ................................ 23
Gain or loss (Worksheet E) .... 24
Reimbursements, excess includible
in income:
More than one policy (Worksheet
C) ................................ 20
One policy (Worksheet B) ..... 19
X
X-rays .................................... 15
Publication 502 (2012) Page 35

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