Dental insurance premiums may be tax deductible. The Internal Revenue Service (IRS) says that to be deductible as a qualifying medical expense, the expenditures must be for procedures to prevent or alleviate dental disease, including dental hygiene and preventive exams and treatments. Dental insurance that is for purely cosmetic purposes, such as teeth whitening or cosmetic implants, would not be deductible. Since your insurance covers treatments and services that treat and prevent disease, the premiums are generally eligible to be deducted.
Key Takeaways
- Dental insurance premiums can be tax deductible under certain conditions.
- To deduct spending on procedures, they must be to prevent or alleviate dental disease.
- Expenditures on cosmetic procedures, such as teeth whitening and veneers, are not tax deductible.
What Does Dental Insurance Typically Cover?
That’s not usually a problem, however, as dental insurance rarely covers cosmetic work. Instead, it only covers procedures strictly related to health and wellness. It often has a three-tier structure, known as 100-80-50, and a median annual maximum of $1,500.
Under this plan structure, preventive care—such as annual cleanings, X-rays, and sealants—is 100% covered. Basic procedures—such as fillings, extractions, and periodontal treatment for gum disease—are covered at 80%. Major procedures—crowns, bridges, inlays, and dentures—are covered at 50%. Depending on your plan, root canals can fall into either the basic or major category. Most plans focus on preventive and basic care, and not all procedures are covered.
What Is Considered Cosmetic Dentistry?
Cosmetic dentistry includes procedures that exist for the main purpose of improving the appearance of the patient’s teeth and smile. Whitening treatments, veneers, bonding, and most straightening procedures are included in this group. These procedures, while widely known and quite popular, tend not to be covered by insurance and require the patient to pay the entire cost. And, unfortunately, such costs would not be tax deductible.
Where Are Dental Insurance Premiums Tax Deductible?
For most taxpayers, the cost of medical and dental insurance premiums paid during the tax year are deductible on form 1040 Schedule A as a medical and dental expense. Only the total of all qualifying medical and dental expenses, including insurance premiums, that when combined exceed 7.5% will actually be included in the total of all itemized deductions. On that note, it should be said you must forego the standard deduction, and itemize deductions in order to deduct medical and dental expenses.
For example, if a couple has an AGI of $100,000 and spent $6,000 on qualifying medical and dental expenses, including dental insurance premiums, then none of these expenses would be included as an itemized deduction. 7.5% percent of the AGI would be $7,500, which is higher than the couple’s medical and dental expenses.
Self-employed individuals may deduct dental insurance premiums under certain conditions in the form of an adjustment to income on Schedule 1, rather than as an itemized deduction on Schedule A.
If You Are Self-Employed
If you are self-employed, you can deduct the cost of dental insurance for yourself, your spouse, and your dependents in the form of an adjustment to income, but only if “you were self-employed and had a net profit for the year reported on Schedule C (Form 1040) or Schedule F (Form 1040).” In addition, the insurance plan must be established under your business and “can be either in the name of the business or in the name of the individual.”
You deduct the cost of dental insurance on Schedule 1, line 17, as an adjustment to income, without having to itemize deductions on Form 1040 Schedule A with the 7.5% of AGI limitation described above.
What Types of Procedures Are Considered Cosmetic?
Anything that is not necessary for health and wellness is likely to be considered a cosmetic procedure. Things like veneers or teeth whitening are examples of cosmetic procedures. Things like regular checkups, fillings, extractions, and periodontal care are considered necessary for health and wellness.
How Do I Deduct the Cost of Dental Insurance?
When filing taxes, the cost of medical and dental insurance premiums paid during the tax year can be included on form 1040 Schedule A as a medical and dental expense, if you are itemizing your deductions. Only expenses exceeding 7.5% of your adjusted gross income can be deducted.
What If I Have an FSA or an HSA?
Dental insurance premiums paid with funds from a flexible spending account (FSA) or health savings account (HSA) are not deductible, as these funds are pretax, and the IRS does not allow a double tax benefit.
The Bottom Line
Medical and dental expenses can be tax deductible if they are for procedures that prevent or alleviate dental disease. Expenditures for cosmetic procedures, such as teeth whitening and veneers, are not tax deductible. The IRS considers dental insurance premiums to be spending towards something that prevents or alleviates disease, and therefore eligible to be deducted.
