Deducting Breast Cancer Expenses From Your Taxes

Woman paying medical bills
What breast cancer costs may you deduct from your taxes?. Terry Vine/Getty Images

If your medical expenses are piling up during breast cancer treatment, you should be able to recoup at least some of your out-of-pocket costs on next year's taxes. You may be surprised at what qualifies as a medical expense that may be claimed as a tax deduction—wigs, psychotherapy, and transportation, just to name. Let's take a look at what you should know before filing.

Medical Tax Deductions

The federal government places a minimum on the medical expenses you must accrue in a given year to deduct them on your taxes.

They must exceed 10 percent of your adjusted gross income (AGI). (Check last year's taxes for a reference if you're not sure of this number.) For example, if your AGI is $40,000, your expenses would have to be at least $4,000 or more to be of any use on your taxes.

For most taxpayers, that threshold puts the medical deductions out of reach. For breast cancer patients, the required total could easily be met or exceeded. Expenses associated with treating breast cancer vary widely depending on your condition, your treatment, and your insurance coverage.

One study found that the average cost for the first year of breast cancer treatment ranged from $16,226 to $39,305. However, another study found the average total cost of care for women with metastatic breast cancer was $128,500.

If you usually do your own taxes but are not used to the complicated itemizing process, this may be the year to hire an accountant who can get it all organized for you.

Many people find that they save more money than they spend to hire a good accountant. If you'd like to forge ahead on your own, here are the basics:

  • You can deduct expenses that you paid for yourself, a spouse, a dependent child, or any other dependent relative whose health care you financially supported. In other words, the "10 percent" you reach can include not only your deductible medical expenses but those of your spouse and children. When you add in eyeglasses and braces, that number can rise rapidly.
  • You cannot claim anything that was reimbursed through a flexible spending account (FSA).
  • You must keep good records (receipts, bank statements, etc.) that account for every eligible expense (explained more as follows).
  • You must file a Schedule A, Form 1040. The simple 1040 alone or the 1040 EZ cannot be used to deduct these expenses.

What's Deductible?

The IRS has a fairly broad interpretation of what qualifies as an eligible medical expense. More than just co-pays and prescriptions, it can include just about any expenses incurred as a direct result of medical or dental care. A full explanation is available in here.

For a breast cancer patient, examples include:

  • Transportation to and from treatment as well as lodging if an overnight stay was required (certain restrictions such as the amount that may be deducted apply).
  • Wigs purchased after hair loss due to illness or treatment.
  • Breast reconstruction surgery after a mastectomy.
  • Payments made to a smoking cessation program, but not for over-the-counter treatments such as nicotine gum or patches.
  • Home improvements to increase accessibility, such as lowering kitchen cabinets or installing closet systems that reduce the need for high reaching.
  • Physical therapy or drug therapy—such as Tamoxifen or Herceptin prescribed during or after breast cancer treatment—or whatever your insurance doesn't cover.

    Learn more specifically exactly what cancer costs are tax-deductible, as well as what forms you will need to report these deductions.

    What's Not Deductible?

    It's easy to get carried away and start piling up receipts for every little thing. But don't include items that are not directly connected to necessary medical or dental care. Examples include:

    • Purely cosmetic procedures, such as hair removal or teeth whitening.
    • Nutritional supplements, unless specifically prescribed as part of your condition.
    • Insurance premiums or contributions to a flexible spending account.

    Tracking

    Designate a capable family member to be your record keeper if you can't do it.

    This person should keep a file that contains every record—receipts, canceled checks, etc.—that you'll need to make your claim. It may be helpful to enter each of these on a chart as they come in to avoid swimming through a sea of papers at the end of the year.

    Bottom Line on Tax Deductions with Breast Cancer

    With many insurance companies now requiring people to pay for a portion of medical services, more people are easily meeting the 10 percent cut-off which makes itemizing medical deductions helpful. If you have a spouse and children, it's amazing how quickly that number can rise, especially when you carefully look at all expenses from contact lens solution, to dental care, to transportation costs to and from clinics and hospitals.

    In order to maximize your tax deductions it's important to keep careful records. Many people find it helpful to record costs in a notebook or on an excel file in their computer as they occur, rather than trying to gather all of these documents out of a shoe box just prior to tax deadlines. Hiring an accountant is often cost-effective when you decide to deduct medical costs.

    Sources:

    Internal Revenue Service. Topic 502 – Medical and Dental Expenses. https://www.irs.gov/taxtopics/tc502

    Vera-Llonch, M., Weycker, D., Glass, A. et al. Healthcare Costs in Women with Metastatic Breast Cancer Receiving Chemotherapy as Their Principal Treatment Modality. BMC Cancer. 2011. 11:250.