Laser-Assisted In Situ Keratomileusis, or LASIK, is an investment in your vision and your future. This procedure can improve your quality of life by decreasing your dependence on glasses and contacts. But let’s be real, it involves some expense! And when you spend that kind of money on your health, you may wonder – is this tax-deductible? That’s a great question, and we’ll go over all the details in this article.
Can I Write Off LASIK Surgery on My Taxes?
The Internal Revenue Service (IRS) allows for the deduction of medical expenses on your tax return. To do this, you must itemize your deductions, rather than taking the standard deduction. You must also reach a certain threshold for your medical expenses for them to be tax-deductible.
If you live in a state with income tax, you should check your state’s guidelines for deducting medical expenses, as these rules will differ from the federal standards, and can differ from state to state.
Is LASIK 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." This includes payments for medical services to physicians, surgeons, dentists, optometrists, and other health care professionals. Refractive surgery, including LASIK, falls within this definition. That means it absolutely qualifies as a medical expense according to the IRS.
Things To Know About Claiming LASIK On Your Taxes
To claim LASIK on your income tax return, there are a few guidelines to keep in mind. If you use an accountant, they should be familiar with these. Nevertheless, you’ll want to be aware of the rules, as they could affect how you plan your medical spending for the year.
Itemizing vs Using a Standard Deduction on My Taxes
There are two ways to lower the net taxable income on your income tax return: the standard or itemized deduction.
The standard deduction reduces the income you’re taxed on by a fixed amount. For 2022, it’s $12,950 for individuals and $25,900 for married couples. This amount is slightly higher for those that are blind or over the age of 65. Even if you have no deductions, you’re able to take the standard deduction on your income tax return.
The itemized deduction allows you to specify all of your tax-reducing expenses. Using the itemized deduction takes a little bit more effort since it involves listing your charitable donations, healthcare expenses, theft losses, mortgage interest, etc. This is what’s necessary to take advantage of deducting medical expenses such as LASIK.
Generally speaking, you’ll want to elect to take the itemized deduction only if it exceeds the standard deduction. Although it involves a little extra work, itemizing your deductions may allow you to lower your taxable income a great deal. If you’re considering taking the itemized deduction, you’ll need to track all your eligible expenses throughout the year and save your receipts in the event of an audit.
Limitations to Writing-Off LASIK Expenses
There are limitations to writing off LASIK expenses. First, in order to make it worthwhile, your itemized deductions must exceed the standard deduction. Next, your medical expenses in a given tax year must exceed 7.5% of your adjusted gross income (AGI). Only the amount exceeding this threshold is tax-deductible. The threshold used to be 10%, but legislative changes in 2019 lowered it to 7.5%.
For example, if your AGI is $40,000 a year, only the medical expenses exceeding $3,000 will be tax-deductible. If your only medical expense for the year was LASIK and you paid $7,000 for the surgery, you could deduct $4,000 of it.
Deduction Of LASIK-Related Expenses
In addition to the cost of LASIK itself, there are other related expenses that may be tax-deductible. For example, if you need to travel to the clinic, your mileage, flight, and/or lodging (within limits) can be itemized as a deduction as well.
Other Ways to Save Money On LASIK
If your itemized deductions don’t add up to an amount beyond the standardized deduction, or if your medical expenses don’t exceed 7.5% of your AGI, rest assured; that there are other ways to save on LASIK.
Flexible Spending Accounts (FSAs) are a great way to set aside tax-free dollars to pay for LASIK. The contribution limit for 2022 is $2,850. If you plan ahead, you can set these funds aside and use them to pay for part of your procedure when the time comes. You must use the money in your FSA by year-end (or shortly thereafter if a grace period is offered); otherwise, you’ll lose it.
Alternatively, if you have a High Deductible Health Plan (HDHP), you can contribute to a Health Savings Account (HSA). The 2022 limits are $3,650 for an individual and $7,300 for a family. Those 55 and older can contribute an extra $1,000. This is another way to set aside tax-free money to spend on LASIK. Unlike the funds in an FSA account, money in an HSA carries over from year to year, so you can save up over time until you have enough to cover the cost of your procedure.
If you choose to pay for LASIK using after-tax funds, consider using a credit card that offers you benefits. With large transactions such as paying for LASIK, you may earn enough points to redeem for significant cash back or rewards.
Or, if you’d just rather put off paying for LASIK until a later time, Kraff Eye Institute provides financing options through Care Credit.
Schedule Your Free Consult Today
If you’re ready to invest in your vision, contact the Kraff Eye Institute to schedule your free consultation today.