H&R Block Details 7.5% AGI Medical Deduction and $3,300 FSA Cap
H&R Block guidance clarifies that taxpayers can only deduct unreimbursed medical costs exceeding 7.5% of adjusted gross income and must itemize to benefit. HSAs offer pre-tax contributions for out-of-pocket expenses with balances growing tax-free, while FSAs are capped at $3,300 and lose unused funds annually.
1. Medical Expense Deduction Threshold
Unreimbursed medical expenses exceeding 7.5% of adjusted gross income are deductible only if taxpayers itemize deductions and their total itemized deductions surpass the standard deduction.
2. Health Insurance Premiums and Itemization
Health insurance premiums can be included in itemized medical expenses once the 7.5% AGI hurdle is cleared, but clients must evaluate whether itemizing yields greater savings than the standard deduction.
3. HSA Vs FSA for Pre-Tax Savings
Health Savings Accounts allow pre-tax contributions for out-of-pocket costs with funds rolling over and growing tax-free, while Flexible Spending Accounts are capped at $3,300 per year and forfeited if unused.
4. Other Deductible and Non-Deductible Items
Prescription weight-loss drugs tied to a medical diagnosis may qualify for deduction under the same 7.5% AGI rule, but gym memberships and fitness trackers are generally non-deductible without a formal medical necessity letter.