I had a bad car accident and lots of medical bills for the past year. Some of ithe bills were covered by my medical insurance plan but not all. I have a lawsuit in progress against the vehicle that hit me.

I want to know :
can O claim any of these medical expenses that I paid on my income taxes or does the fact that I may get paid for these via a lawsuit mean I am not allowed to claim the medical expenses on my taxes.

If I can claim the medical expenses does that mean I only can claim my "out of pocket" medical expenses not what my medical insurance plan covered ?

Also if I do win the lawsuit my medical insurance company has informed me I must reimburse them for any payments they made to cover my medical expenses. I am aware of that. Not sure if that is a factor re taxes since I have to pay them back re claming.

Thanks

MukatA

You can deduct medical expenses that are more than amount paid by insurance. Also if later on the expenses claimed by you are reimbursed, you must report that medical expense reimbursement as income.

This deduction is itemized deduction. You will take deduction only if your itemized deductions are more than your standard deduction..You can deduct the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income (Form 1040, line 38). Read: Your U.S. Tax Return: Itemized Deductions

AtlantaTaxExpert

I would hold off on claiming the medical expenses until you get resolution for the lawsuit. You can always go back and amend the return after the lawsuit is completed IF you do not recover the medical expenses as part of the lawsuit. For 2008, you will have until 15 April 2012 to amend the return.

This way, you will NOT have to declare as income the medical reimbursement part of the settlement from the lawsuit.

citylover

One more question on this. What about if I take my "out of pocket" expenses out of my Flex Spending account. Can I also claim them in the lawsuit and if I do will I then have to then also claim it as income?

AtlantaTaxExpert

Flex account money is tax-free money. If you claim medical expenses on your Flex account, then get reimbursed by ANY means, the reimbursement becomes taxable income.