When preparing to pay for orthodontic treatment, many new patients have questions concerning the tax status of their treatment costs. Since treating oral health issues is an expensive process, you may be happy to learn that orthodontic treatments are tax deductible just like any medical expense.
The trick is in making sure that you qualify for these deductions based on the type of treatment you received, your income level, and more. While not everything you pay at the orthodontist may be deductible, even if only some of the costs can be written off, you and your family could potentially save a lot on your treatments on this year’s tax forms.
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How are Medical Expenses Taxed?
According to the IRS, “payments of fees to doctors, dentists, surgeons …” and other medical practitioners are tax deductible. This means that the orthodontic work you receive is a qualified medical expense, including any work done on your spouse or dependents.
Importantly, the orthodontic expenses you pay must be deducted from your taxes for the year you pay them, even if you receive the services or finish the treatment in another year. This means that if you pay upfront in 2023 for an 18-month braces treatment, you can only deduct the bill on your 2023 tax return.
What is an HSA?
An HSA or Health Savings Account can be opened through some places of employment to pay for medical expenses in a tax-friendly way. These accounts allow you to pay your expenses up-front with your HSA card so that your treatment amount applies to that year.
What is the Deduction Threshold?
Before you use an HSA to put your treatments on your taxes, you should know that orthodontic expenses share the same deduction threshold as other medical expenses. In other words, you cannot deduct orthodontic expenses in an amount that exceeds a predetermined percentage of your adjusted gross income (AGI). This percentage can change depending on the year.
For example, in 2022, you could only deduct medical expenses, including orthodontic bills, up to 7.5% of your AGI. If you made $60,000 in 2022, this means you can deduct up to $4,500 of qualified medical expenses.
Watch for the Standard Deduction
However, note that if you itemize your deductions to reach the threshold, you may not be able to claim the standard deduction, depending on your income level, age, and disability status. In cases where the deduction you get on your medical expenses is lower than the standard deduction, it’s unlikely that you will profit from claiming your orthodontic bills on your taxes.
What Procedures Qualify for the Deduction?
Many dental or orthodontic procedures qualify for the deduction so long as you paid out-of-pocket for the treatment. Qualifying expenses include the costs of visiting your provider, paying for any prescription medications, buying medical supplies, or paying for transportation to your appointments.
Treatments are also covered, such as braces (including Invisalign), crowns, dental implants, surgeries, appliances, bridges, bondings, dentures, fillings, extractions, root canals, repairs, fluoride treatments, and more. Any time your dentist or orthodontist diagnoses or treats an oral health issue, it is likely covered under the IRS’s medical expenses section. Even cleanings can be deducted because they fit under the category of treatments that support the health and structure of your body. However, whitening treatments and purely cosmetic visits will not count.
Remember that dental and orthodontic expenses are not claimed separately from your other medical deductions. You must itemize your expenses, just as you would with any medical deduction, to claim them on your taxes as part of that section. And if you claim the standard medical expenses deduction, you cannot claim your orthodontic expenses separately.
What is My AGI?
AGI or Adjusted Gross Income is the main number used to calculate your eligibility for medical expenses deductions, including orthodontic expenses, on your tax return. Your AGI is the amount you made in that year minus any adjustments. This means you add up your wages, gains, business income, retirement payments, dividends, and other income and subtract the deductions you can take.
Your AGI can be 0, but it’s a number that you need to calculate to figure out whether the standard or the individual deduction is best for you. To learn more, you should speak with a tax advisor on how to file your returns correctly for your situation.
Choose Reese Orthodontics
If you’re an adult who is considering braces, you need professional advice on your treatment and payment options. For orthodontic treatments in Charleston, SC, Reese Orthodontics offers the latest technology and treatment plans. Our advanced and comfortable orthodontic treatments can be customized to suit your needs. A consultation with Reese Orthodontics includes scans, a comprehensive exam, and a conversation with the orthodontist to discover which treatment options are right for you.
Schedule an appointment with us today to stay ahead of your oral health and receive the best possible treatment in your area.