Medical Expense Loan

By | February 25, 2014

If an individual has a medical procedure performed, and as a result, owes the hospital money for the procedure, and the hospital agrees to accept installment payments for the procedure over a period of time: is there a medical expense of the full amount owed, in the year of the procedure; or in the amount of a payment, as each payment on the “loan” is made?


Medical expenses are potentially deductible

Medical expenses are potentially deductible, on schedule A, but only in the year you paid them. What you might be thinking of, is if you charge the expenses of the medical provider to a credit card this year, and pay the charges off over several years, they are deductible in the year the charges post to your credit card. That’s a way to deduct the entire medical charge this year.


Medical Expenses on Credit Card Deduction

If you finance your medical expenses with a credit card, you must claim the expenses in the year the charge is made to the IRS, regardless of when you actually make the payments on the credit card for medical expenses. For example, assume you swipe your credit card to pay for your medical expenses on December 30, 2014, you get the credit card bill in January 2015, and you pay it off between 2015 and 2016.

IRS Information on Medical Expense Loan

According to IRS Publication 502, you would claim the entire deduction on your 2014 tax return because that is the year in which you made the payment, even though you didn’t pay off the credit card until future years.