Image of a service dog

A lot of Americans who used to itemize their taxes won't do it this tax season. That's because the new tax law has cut or limited many deductions.

According to the nonpartisan Tax Foundation, about 90 percent of taxpayers will take the new, higher standard deduction on their federal 2018 tax returns, up from about 70 percent.  

But the federal deduction for medical expenses hasn't been eliminated. So if you have significant medical expenses, it still could be worthwhile to itemize your federal taxes to deduct those costs. 

More Generous Medical Write-Off for 2018

This tax season the Tax Cuts and Jobs Act allows you to write off qualified medical expenses that exceed 7.5 percent of your 2018 adjusted gross income, a more generous break than the 10 percent threshold of old. (The 7.5 percent break also applies to tax year 2017.)

"Someone in a nursing home may have deductible medical costs in excess of their AGI threshold," says Barbara Weltman, an attorney and contributing editor to J.K. Lasser’s “Your Income Tax” book series. For seniors especially, many of whom have big out-of-pocket medical costs, itemizing may be better than taking the standard deduction, she adds.

That generosity ends for 2019, however. When you file your taxes next season, your medical expenses will have to exceed 10 percent of your AGI to be eligible for the deduction.

Break for Service—Not Therapy—Animals

And you might be surprised at all the types of medical deductions available. For instance, you can deduct expenses for a service dog or other service animals if you are visually impaired or hearing-disabled, or have another physical disability.

More on Taxes

Among the tax deductions you can take for a service animal are the costs of buying, training, and maintaining the animal. You can also deduct expenses for food, grooming, and veterinary care, according to IRS Publication 502, Medical and Dental Expenses.

These tax deductions are allowed only for a recognized service animal, not for a therapy animal. (You might also be able to deduct expenses if an animal is part of your business.)

Other Unusual Medical Deductions

Service dogs aside, there are plenty of other unusual tax deductions that you might not have considered. Weltman points to other, some esoteric, deductions:

• Wigs prescribed by a psychiatrist to deal with anxiety about hair loss.
• A special bed or mattress to help your back or sleeping disorder, if prescribed by a doctor.
• Home improvements to make your home accessible to someone with a disability.
• New siding on a home where a resident is suffering from mold on the old siding.
• Remedial reading help for a dyslexic child.
• Herbal supplements prescribed by a doctor for migraine headaches.
• Batteries for a hearing aid.
• Laser eye surgery.
• In-vitro fertilization treatments for someone who is infertile.
• The difference between the cost of a gluten-free diet and your old diet if it costs more and is prescribed by a doctor.
• Travel to visit a child in rehabilitation, if a doctor recommends the visit. 

Write-Offs on Your State Tax Return

Even if your deductible medical expenses aren't high enough to warrant a federal tax deduction, you may be able to get a tax break on your state income tax return, says Ann-Marie Long, a CPA and tax manager at SKC & Co., a CPA firm based in Boonton Township, N.J.

She notes that only 28 states follow the federal guidelines for itemized deductions as a starting point for their own income tax rules. 

"Many states have lower thresholds for deductibility and some allow you to deduct 100 percent of your out-of- pocket medical expenses," Long says. "If you have a major medical expense, or large charitable contributions in any one year, it is worth making the extra effort to total them both just to be sure." 

The combination of both may raise your itemized deductions above the new standard deduction, making itemizing worthwhile.

Even if you take the standard deduction on your federal return, your state may allow you to deduct your medical expenses, says Darren Zagarola, CPA and owner of EKS Associates, a fee-only financial planning firm in Princeton, N.J.

New Jersey, for instance, lets those who take the standard deduction on their state forms write off medical expenses. New York lets residents itemize on state returns, even if they take the federal standard deduction.

If there's a chance you could be eligible for a tax break, provide your tax professional with a summary of your out-of pocket medical expenses, Long says. 

"Your tax preparer does not necessarily need to see the receipts," Long adds. "But if you are able to take a state or local tax deduction for those medical expenses, you should keep all receipts, bills and explanations of benefits from your insurance providers with your tax return in the case of an audit."