The 411 on dental deductions in 2021

Business News | 25 Mar |

This year, while the federal tax deadline has been extended, Arizona state taxes must still be filed by April 15, unless you’ve filed an extension, in which case they are due October 15, 2021. Either way, if you plan on itemizing your federal deductions, you may be able to deduct dental expenses for yourself, your spouse and your dependents.

According to the IRS, medical and dental care expenses include “payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body.”

This means you may be able to deduct a variety of expenses including preventive and more extensive dental treatments such as:

Mark Anderson, CPA, is the chief financial officer at Delta Dental of Arizona.

• Cleanings

• Sealant

• Fluoride

• Fillings

• Braces

• Extractions

• X-Rays

• Dentures

Payment for participation in a smoking-cessation program – one of the best ways to immediately improve one’s dental health – as well as for medical aids that alleviate nicotine withdrawal and require a prescription may also be deductible.

Travel costs to and from dental appointments – both yours and those you provide to your spouse or dependents – may also deductible, and this includes an array of means of travel. For example, this includes:

• Taxi or bus fare

• Rideshare

• Ambulance

• Personal car

You may also deduct the amount of your actual out-of-pocket expenses such as for gas and oil, the amount of the standard mileage rate for medical expenses and the cost of tolls and parking. One important update from 2020: the IRS’ current standard mileage rate for a car when you use it for medical reasons is 16 cents a mile, which is down from 17 cents last year.

Generally, medical expenses exclude the amount you pay for cosmetic procedures or services that do not promote the proper function of the body or prevent or treat illness or disease. The cost from whitening one’s teeth or getting cosmetic veneers, for example, is not deductible. You also can’t include expenses that were paid by insurance companies or other sources. For a full list of potential write-offs, check out Publication 502 on the IRS’ website.

Before taking a deduction, you need to check your dental and medical expense percentage. Normally, you can only deduct the amount of your medical and dental expenses that are more than 7.5 percent of your adjusted gross income.

Finally, if looking for one last deduction in general, be aware that you can receive a dollar-for-dollar tax credit on your Arizona tax return by making a donation to a qualified charitable organization – like the Delta Dental of Arizona Foundation – by April 15.

If you have additional questions or want to know if Arizona offers a state income tax deduction for dental expenses, consult your personal tax advisor as this information is general in nature and not intended as a substitute for tax advice.

Mark Anderson, CPA, is the chief financial officer at Delta Dental of Arizona. He oversees multiple departments, including finance, accounting, information technology and facilities management. With more than 30 years’ experience in finance and health care, he serves on several boards within the community, including Southwest Human Development and Arizona Coyotes Foundation. www.deltadentalaz.com  

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