Keep 2020 Mileage Rates in Mind When Deducting Medical Expenses

Some of your households may have unreimbursed medical expenses that include travel expenses to and from treatment. And if any of these households are classified as elderly or disabled, HUD permits a medical expense deduction to be used to calculate their adjusted annual income. So be sure these households are aware that you can include mileage to and from medical appointments and to and from regular medical treatments as part of the medical expense deduction.

When calculating the medical expense deduction, the actual cost of traveling to and from treatment is used. This can be bus or taxi fare or, if driving a car, a mileage rate based on IRS rules. So, when calculating the medical expense deduction for mileage to and from medical treatments or appointments, be sure to use the new 2020 mileage rates.

The IRS recently issued the 2020 Standard Mileage Rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes. Beginning on Jan. 1, 2020, the standard mileage rates for the use of a car is 17 cents per mile driven for medical or moving purposes, down three cents from the rate for 2019.

Medical Expense Deduction Basics

The medical expense deduction is permitted only for households in which the head, spouse, or co-head is at least 62 years old or is a person with disabilities [HUD Handbook 4350.3, par. 5-10(D)(1)].

Include all family members. If this classification applies to your household, you must include out-of-pocket medical expenses for all household members except live-in aides, even if the other household members are not elderly or disabled [HUD Handbook 4350.3, par. 5-10(D)(2)].

For example, if a household includes a 70-year-old grandfather (head), a 37-year-old daughter, and a 4-year-old grandson, the medical expenses of all three family members would be considered when calculating the medical expense deduction.

Include all unreimbursed expenses. Medical expenses include all expenses the family expects to incur during the 12 months following certification/recertification that aren’t reimbursed by an outside source, such as insurance [HUD Handbook 4350.3, par. 5-10(D)(3)].

Deduct excess of 3 percent. In addition, elderly or disabled households may deduct medical expenses in excess of 3 percent of gross income [HUD Handbook 4350.3, par. 5-10(D)(5)].

For example, suppose the age of the head of household is 64. The spouse is 58. Their annual income is $12,000, and their total medical expenses, which include travel to and from treatment, are $1,500. First, you would calculate 3 percent of $12,000 ($360). To obtain the medical expense deduction, you would subtract 3 percent of annual income from total medical expense. Here, the allowable medical expenses would be $1,140 ($1,500 - $360).