Can You Deduct the Cost of Dental Care in Costa Rica on Your Taxes?
Are you considering major dental work like a full mouth restoration or dental implants and need to know if you will be able to deduct the cost of your dental care on your income taxes? The good news is that major dental work may qualify as a tax write-off, even if you travel to Costa Rica for your dental care.
Major dental work such as dental surgery, dental implants, dental bridges or dental crowns can cost thousands of dollars. Even routine visits to the dentist can be expensive. The Internal Revenue Service considers dental care costs to be a medical expense. However, that does not automatically mean major dental work will count as a deduction for income tax purposes.
IRS Dental & Medical Rules
In order to deduct the cost of your dental care on your income taxes, you will need to file an itemized tax return. You may claim only unreimbursed medical expenses, including dental expenses that are in excess of 7.5 percent of your adjusted gross income. For example, if your AGI is $75,000, the first $5625.00 in unreimbursed medical expenses is not tax deductible. All medical and dental expenses in excess of that figure can be used as a tax deduction. As of 2021, the medical expense deduction threshold is currently 10%. This means that all medical expenses from 2021 must exceed 10% of your AGI if you want to deduct them in your 2022 taxes. Remember that if you receive reimbursement from your insurance, you may not deduct the reimbursed amount.
Qualified Medical and Dental Expenses
Major dental care costs that may be included in your medical expenses for tax purposes include dental surgery, dental implants, crowns and bridges, braces, extractions, fillings and other restorative dental work. Hospital stays are also qualified expenses, as are related costs such as X-rays and medications prescribed by your dentist. In addition, routine and preventive dental care such as teeth cleaning and visits to your dentist are allowable. These must be included with your other medical expenses. There is not a separate deduction for dental expenses only.
Nonprescription medications recommended or prescribed by your dentist are also deductible. While you may not deduct any dental expense if the cost is reimbursed by health or dental insurance, you may deduct the cost of the insurance premiums if you, rather than your employer, pay them. Finally, you may not deduct dental or health care costs paid for through a health savings account or employer-provided reimbursement plan.
Are International Medical and Dental Travel Expenses Deductible?
The IRS also lets you deduct the expenses that you pay to travel for medical and dental care, such as mileage on your car, bus fare and parking fees. But what about the cost of international travel for medical or dental care?
Medical tourists are allowed to deduct transportation costs incurred to obtain medical and dental care, provided the transportation is primarily for, and essential to, such required care. Transportation costs include amounts paid for trains, buses, cabs, airplanes, or even an ambulance if needed. Transportation expenses may also be deducted for someone traveling with the person seeking medical or dental care. This makes it easy to travel with a friend or family member and to deduct the travels costs as part of the medical or dental expense.
Are Meals and Accommodations Deductible?
One of the primary expenses for medical and dental tourism is the cost of travel. Medical and dental tourists who travel abroad for care must plan for meals and hotel expenses while traveling. The costs of meals and lodging are deductible as medical expenses when a taxpayer receives in-patient care at a hospital or other equivalent facility. Hotel and meal expenses are allowed for both the patient and caregiver or companion. Medical and dental tourists should document the need for a travel companion to justify all travel expenses.
Even if medical or dental tourists do not receive care at a hospital, they may deduct lodging costs under the following specific conditions:
- The lodging is primarily for and essential to medical or dental care.
- The lodging is not lavish or extravagant.
- There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.
If these conditions are met, the amount allowable as a medical expense for lodging cannot exceed $50 per night per person for up to two people (i.e., the patient and a caregiver). For example, if a medical or dental tourist travels to Costa Rica to receive dental implants, the patient may deduct up to $100 per night for lodging for himself and a companion. Remember, in order to deduct the lodging expenses of a caregiver, the taxpayer must actually pay those expenses; if the caregiver pays for her own expenses out of pocket, she may deduct her portion of the allowable lodging of $50 per night only if the person she is traveling with is her spouse or dependent. A taxpayer may not deduct the cost of meals as a medical expense unless he is being treated in a hospital or an equivalent licensed facility.
Every year, tens of thousands of American and Canadian patients come to Costa Rica for affordable, high quality dental care. The average patient saves from fifty to seventy percent when compared to costs for the same dental care at home. American patients that plan properly and document their dental and travel expenses well can also deduct most or all of their care on their income taxes, realizing even greater cost savings.
Patrick Goodness, CEO