As you prepare to file your tax return, take time to organize your records regarding medical expenses. Although you must meet a threshold in order to take the deduction, you cannot make that calculation unless you have retained your records and added up your expenses. You may be surprised to learn what you may include such as mileage or travel expenses plus meals and lodging if you go out of town for care.
Even if you do not reach the threshold for the deduction or do not itemize, there’s another use for compiling your medical expenses. Use this data to estimate the set aside amount for a Flexible Spending Account (FSA). Using an FSA allows you to pay qualified medical expenses with pre-tax dollars. However, it’s critical not to overestimate your expenses because you will forfeit any dollars remaining in your account at the end of the plan year.
See IRS Publication 502 for details regarding qualified medical expenses.
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