Laser eye surgery isn't covered by most medical insurance policies, but the Internal Revenue Service has some good news for you if you're thinking about having the procedure done. You might be able to deduct the cost of the surgery on your tax return as a medical expense.
According to the IRS:
"You can include in medical expenses the amount you pay for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy."
Laser eye surgery is specifically mentioned in the rules cited in IRS Publication 502.
What LASIK Surgery Is
Laser-assisted eye surgery or vision correction is a refractive procedure that's most often done on an outpatient basis. It's commonly used to correct nearsightedness, farsightedness, and astigmatism.
A laser is used to reshape the cornea—the round dome located at the front of the eye. This enhances the way the eye focuses light onto the retina at the back of the eye and improves vision.
The Tax Definition of a Medical Expense
The IRS defines medical expenses as:
"...the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body."
These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners, as well as the costs of equipment, supplies, and diagnostic devices needed for these purposes.
You Have to Itemize to Claim the Expense
Assuming your procedure qualifies as laser surgery and as a medical expense, you'll have to itemize your deductions on your tax return in order to claim it. This means you can't also claim the standard deduction for your filing status.
You must tally up everything you paid toward medical expenses for yourself and your dependents over the course of the year. Add to that all other expenses you paid that qualify as being tax deductible, including things like charitable donations and mortgage interest. You'd then enter the total on Schedule A, which you must then attach to your tax return.
You would then enter this number on your Form 1040 tax return in lieu of the standard deduction.
Is It Worth It?
The standard deduction for a single taxpayer is $12,500 for tax year 2020. You would therefore need at least $12,401 in total itemized deductions to make claiming them worth your while. You'd save just pennies on your taxes, literally 24 cents if you're in the 24% tax bracket, if you have $12,201 in itemized deductions.
A Limitation on Medical Expenses
Unfortunately, you won't be able to claim all your medical expenses when you're coming up with that total of itemized deductions on Schedule A and your tax return.
You can only deduct the part of your medical and dental expenses that is more than 7.5% of your adjusted gross income (AGI) on Schedule A (Form 1040 or 1040-SR). The 7.5% threshold used to be 10%, but legislative changes at the end of 2019 lowered it.
The 2020 Form 1040 is expected to be somewhat different. Your AGI might not appear on line 7 of that return, but it should be clearly designated.
As an example, you can only deduct medical expenses that exceed $4,875 if your AGI is $65,000. You could claim a $2,125 deduction with an AGI of $65,000—not necessarily the entire cost of your LASIK surgery—if your total medical expenses for the year are $7,000.
The Effect of the Tax Cuts and Jobs Act
This 10% AGI threshold applied in tax year 2016, and it's back in effect as of 2019. But taxpayers got a break in 2017 and 2018.
The Tax Cuts and Jobs Act (TCJA) retroactively reduced this percentage to 7.5% for 2017 when the law went into effect in 2018. The 7.5% threshold remained in place for 2018, before increasing to 10% in January 2019.
Related Expenses Might Be Deductible
The IRS also allows you to deduct various other expenses that are related to medical care in addition to the actual cost of the surgery. This might help you surpass that 7.5% limit.
Associated deductible expenses include:
- Travel expenses incurred to get to and from your surgery. This includes bus, train, or cab fares, as well as the price of gasoline if you have someone drive you there. You have the option of instead claiming 17 cents per mile as of 2020 if you travel by automobile.
- In-hospital food, as well as lodging if you're required to stay overnight following the surgery.
Find Out If You Should Itemize
Check with an accountant before making the decision to get costly elective surgery with the expectation of writing it off on your taxes.
As a general rule of thumb, itemizing is only a good thing if the total amount of your itemized expenses is greater than the standard deduction for your filing status. You'll probably want to forego claiming a deduction for the surgery if the total amount of all your itemized deductions is less than your standard deduction, so you wouldn't receive any extra tax break.
A tax professional can help you explore all the itemized deductions that might be available to you. The largest deductions for most people who itemize come in the form of mortgage interest and property taxes, so these could put you over the standard deduction amount if you own your home and have even a modest mortgage—before you factor in how much your surgery will cost you over that 7.5% threshold.
And remember, you can include medical expenses you pay for your spouse or dependents as well.