The cost for your cancer treatments will be very high. Even if you have insurance, there will likely be a lot of costs that you will have to pay. You may have to pay a certain amount before your insurance starts to pay for anything (deductible). Also, once your insurance starts paying for your medical costs, you may still have to pay a portion of the costs (co-pay). These costs are tax deductible if you itemize your tax return (rather than use the standard deduction). Even if you have never itemized before, you may want to do so in the year you incur all of your medical expenses.
Keep track of all of your medical expenses (see the list below) during the year – and not just those related to your cancer treatments because once you itemize you can deduct all allowable medical costs. When preparing your tax return, multiply the amount of your adjusted gross income by 7.5%. If your medical bills are greater than that amount, the excess is tax deductible.
So, for example, let’s assume your medical bills total $10,000 and your adjusted gross income is $60,000. Multiply $60,000 by 7.5% and you get $4,500. The amount that is deductible for medical costs is the amount of your out of pocket medical costs of $10,000 less the $4,500. So your deduction for medical costs would be $5,500 à $10,000 minus $4,500.
The following costs are deductible:
- Medical and dental premiums for you and your family
- Medical and dental deductibles and co-pays
- Out of pocket costs for prescriptions
- Costs for treatments deemed by your insurer to be investigative or experimental (even if your doctor doesn’t agree) that you had to pay out of pocket because your insurance company did not pay for it
- Nursing services
- The mileage to get you to and from all of your medical appointments (in 2012 the IRS mileage rate was 23 cents per mile)
- Parking fees and tolls
- Lodging (but not meals) while traveling for the explicit purpose of obtaining medical treatment
- Acupuncture and therapeutic massage you get to ease discomfort and stress associated with treatments
And, although cosmetic surgery is not deductible under normal circumstances, the cost of reconstruction after breast cancer is 100% deductible!!!
Rules and amounts (like the mileage amount) can change from year to year so make sure to check with the IRS (http://www.irs.gov) or your accountant.