It All Adds Up...

The older people get, the more medical expenses they tend to incur. The only saving grace is the expenses may add up to a federal income tax deduction. Specifically, you can deduct medical expenses you are not reimbursed for to the extent they exceed 7.5 percent of your adjusted gross income (AGI) for the year. However, the write-off is only available if you itemize using Schedule A of Form 1040. (Under the stricter alternative minimum tax rules, you can only deduct medical expenses to the extent they exceed 10 percent of AGI.)

What if you pay medical expenses for an elderly relative? You can add those expenses to your own for tax deduction purposes if the relative is your dependent, which means you pay over half of that person's support for the year and he or she does not file a joint federal income tax return. (Source: Internal Revenue Code Sec. 213(a)) However, you must still clear the 7.5 percent of AGI hurdle to claim any deduction.

Common Medical Expenses for Seniors

Here's an alphabetical list of costs that seniors might be likely to incur that count as medical expenses for itemized deduction purposes:

Acupuncture  Ambulance service  Artificial limb  Artificial teeth  Bandages  Braille books and magazines  Car - special equipment so disabled person can drive.  Chiropractor  Christian Science practitioner  Crutches  Dental care including X-rays, fillings, braces, extractions and dentures.  Diagnostic devices  Drugs - prescription only except for insulin.  Eyeglasses and contact lenses, including wetting and cleaning solutions  Eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy.  Guide dog  Hearing aid  Home improvements for medical purposes to the extent they don't add value to the home, including constructing ramps, widening doorways, modifying stairways, etc.  Hospitalization  Insulin  Insurance premiums for health coverage including age-based premiums for qualified long-term care insurance. Laboratory fees

Lifetime care fees - percentage of fees paid under a contract with retirement facility.  Long-term care services  Meals while staying in a hospital or similar facility.  Medicare Part B premiums  Nursing home  Nursing services  Operation (surgery)  Optometrist  Osteopath  Oxygen  Psychiatric care and psychoanalysis  Stop smoking program  Telephone costs of special equipment for the hearing impaired.  Television - special equipment to display subtitles for hearing impaired.  Therapy  Transplant  Transportation to receive medical care at 18 cents per mile in 2006 if you use your own car.  Weight loss program if part of treatment for specific disease or condition, such as obesity.  Wheelchair, including operating and upkeep.   Wig if hair loss is due to medical condition or treatment.  X-rays

- Source: IRS Publication 502,

Medical and Dental Expenses

The itemized federal tax deduction for medical expenses can be meaningful for elderly people who have high expenses and relatively low adjusted gross incomes. Again, don't forget that you may be entitled to deduct medical expenses that you pay for an elderly loved one who is your dependent as defined above.