Medical Deduction: American Expatriates and Medical Expenses

By ZM Ishmurzina

Americans living abroad incur multiple medical expenses. Many American expatriates have a medical coverage in a foreign country through a foreign employer or private insurance. However, some medical expenses might be substantial. Consequently, it is important to know all possible medical deductions on US expatriate tax returns.

This is an email from one of our clients, American expatriates living abroad. “We were blessed with a baby this year. However, we spent a lot of money on medical expenses like fertility treatment, acupuncture, body scans etc. We heard about medical deductions. However, can we deduct medical expenses on US expatriate tax returns while we live abroad? Medical expense deduction might really help our family.”

What is the general rule about a medical deduction?

American expatriates are eligible to take a medical deduction on Schedule A if the total amount of medical expenses exceeds 7.5% of Adjusted Gross Income. For example, if American expatriates have $50,000 (AGI), then they can deduct medical expenses in the amount of $3,750 or higher.

Which medical expenses can American expatriates take as a medical deduction?

The list of eligible medical expenses is substantial.

  • Acupuncture
  • Alcoholism addiction treatment
  • Ambulance service
  • Artificial limb
  • Artificial teeth
  • Bandages and other medical supplies
  • Birth control pills prescribed by a doctor
  • Body scan
  • Braille Books and magazines for visually impaired people
  • Breast pumps and supplies
  • Breast reconstruction surgery
  • Capital improvement to accommodate a disabled condition
  • Special car controls for people with disability
  • Chiropractor
  • Christian Science practitioner
  • Contact lenses, saline solution and enzyme cleaner
  • Crutches
  • Dental treatment
  • Diagnostic devices like a blood sugar monitor
  • Disabled dependent care expenses
  • Drug addiction treatment
  • Eye exam, eyeglasses, eye surgery (but not for cosmetic purposes)
  • Fertility treatments like in vitro fertilization, surgery, including an operation to reverse prior surgery that prevented the person operated on from having children. Some American expatriates with fertility treatments have expenses in a range of $20,000-$100,000.
  • Guide dog or other service animal
  • Hearing aids
  • Hospital services
  • Long-term care services
  • Insurance premiums for medical care coverage
  • Laboratory fees
  • Lead-based paint removal if a child had lead poisoning from eating paint
  • Lodging and meals in a medical institution to receive care
  • Qualified long-term care insurance contracts
  • Medical deduction for prescribed medicines and drugs if American expatriates bought them and consumed in a foreign country and the drug is legal in this foreign country and the USA.
  • Annual physical examination and diagnostic tests
  • Psychologist
  • Pregnancy-test kit
  • Stop-smoking program
  • Special telephone equipment for people with disabilities
  • Transportation expenses for medical care
  • Tutoring expenses for a child with learning disabilities recommended by the doctor
  • Transplants of a organ but it doesn’t cover hair transplant
  • Vasectomy
  • Vision Correction Surgery
  • Weight-loss program and an exercise program if it is required to treat a specific disease diagnosed by a physician
  • Wheelchair
  • Wig prescribed by a physician to a patient who lost hair
  • Oxygen and oxygen equipment to alleviate breathing problems
  • X-ray

This list is quite extensive. However, American expatriates should check the IRS website for the latest updates about medical deductions.

Do you  have additional questions about Medical Deduction?

American expatriates should keep a list of all medical expenses that might qualify for a medical deduction. It is always important to review all possible medical expense deductions. American expatriates who need help with US expatriate tax preparation, medical deductions, FBARs, FATCA and other overseas tax issues, should an expat tax preparer/CPA. International tax experts at Artio Partners are here to help you.