Noon: Individual Tax Tips & Refund Strategies, The Medical Expense Deduction: The Year-End Bunching Move New Haven Families and Self-Employed Filers Should Make Before December 31

NEW HAVEN, CT, Jose’s Tax Service, October 8, 2026.

Year-end medical planning can improve the tax result for families and self-employed filers who have substantial unreimbursed health expenses. The strategy is called medical expense bunching.

Bunching means concentrating eligible medical and dental payments into one calendar year instead of spreading flexible expenses across two years. The goal is to increase the chance that your eligible costs exceed the 7.5% of adjusted gross income (AGI) threshold required for the federal medical expense deduction.

This strategy does not create a deduction by itself. It must be evaluated with your complete Schedule A (Form 1040), Itemized Deductions, calculation.

Understand the Medical Expense Deduction First!

The Internal Revenue Service (IRS) explains the rules in Publication 502, Medical and Dental Expenses and Topic no. 502, Medical and dental expenses.

The basic calculation works as follows:

1. Add eligible unreimbursed medical and dental expenses paid during the tax year.
2. Subtract 7.5% of your AGI.
3. Claim only the amount remaining on Schedule A (Form 1040).
4. Compare your total itemized deductions with the applicable standard deduction.
5. Use Schedule A only when itemizing produces the better overall result.

For example, if your AGI is $100,000, the first $7,500 of eligible medical expenses does not qualify under the 7.5% floor. If you paid $15,000 in eligible expenses, the potential medical deduction before other limits would be $7,500.

Important: The deduction matters only when your total itemized deductions exceed the standard deduction. Medical expenses, state and local taxes, mortgage interest, charitable contributions, and other eligible deductions must be reviewed together.

Know Which Expenses May Qualify!

Under Publication 502, medical care generally includes costs paid for the diagnosis, cure, mitigation, treatment, or prevention of disease. The expense must primarily address a physical or mental illness, disability, or bodily function.

Eligible costs may include:

• Health insurance premiums that you paid with after-tax dollars.
• Dental treatment, including cleanings, fillings, X-rays, braces, extractions, dentures, and other treatment for dental disease.
• Vision expenses, including eye examinations, prescription eyeglasses, and contact lenses.
• Hearing aids, including batteries, repairs, and maintenance.
• Prescription drugs and insulin.
• Medical equipment, diagnostic devices, crutches, wheelchairs, and other equipment used for medical care.
• Qualified transportation for medical care, including mileage, tolls, parking, public transportation, and certain travel costs.
• Qualified long-term care services and limited qualified long-term care insurance premiums.
• Eligible expenses paid for yourself, your spouse, or qualifying dependents, subject to the dependency rules.

Medical expenses must be reduced by insurance reimbursements, Health Reimbursement Arrangement (HRA) payments, Flexible Spending Arrangement (FSA) reimbursements, and tax-free Health Savings Account (HSA) distributions. The same expense cannot be deducted twice.

Apply the 2026 Medical Mileage Rules Correctly!

Transportation must be primarily for and essential to medical care. Maintain a mileage log showing:

• Date of travel.
• Destination.
• Medical purpose.
• Total miles.
• Parking fees and tolls.

For 2026, the IRS medical mileage rate changes during the year:

• January 1 through June 30, 2026: 20.5 cents per mile.
• July 1 through December 31, 2026: 23.5 cents per mile.

The second-half rate was published in Internal Revenue Bulletin 2026-29. Parking and tolls may generally be added separately.

Do not include ordinary commuting, personal travel, or trips taken only to improve general health. Inadequate records can delay processing or cause the deduction to be denied.

Identify Costs That Do Not Qualify Reliably!

Do not assume that every health-related purchase is deductible. The following expenses generally do not qualify:

• Employer-sponsored premiums paid pre-tax through payroll.
• Expenses reimbursed by insurance, an HRA, FSA, HSA, or another source.
• Nonprescription medicines, except insulin.
• Vitamins, supplements, herbal products, and natural medicines unless specific medical requirements are documented.
• Gym, health club, or spa memberships for general health.
• Cosmetic surgery and teeth whitening, unless a procedure treats a deformity related to disease, injury, or congenital abnormality.
• Toothpaste, toiletries, ordinary personal-use items, and maternity clothing.
• Childcare for a healthy child.
• Funeral expenses.
• Vacations or travel for general health improvement.
• Current payments for medical care that will be provided substantially beyond the end of the year.

Warning: A medical provider’s description alone does not guarantee deductibility. The purpose of the expense and the applicable IRS definition must be reviewed.

Make These Year-End Moves Before December 31!

The payment date generally controls. A check is usually paid when mailed or delivered. An online payment is generally paid on the date shown by the financial institution. A credit-card expense is generally treated as paid when the charge is made, not when the credit-card bill is paid.

Use the following checklist:

1. Schedule elective procedures.
   If medically appropriate and already planned, schedule eligible procedures before December 31, 2026. Do not make a medical decision solely for tax purposes.

2. Coordinate dental and orthodontic work.
   Ask your dentist or orthodontist whether a December payment relates to current treatment, an appliance, or services properly paid in 2026. A generic deposit for care that will occur entirely in January may not qualify because future medical care is generally excluded.

3. Order prescription eyeglasses and contact lenses.
   Complete eligible purchases and retain the prescription, invoice, and proof of payment.

4. Purchase needed hearing aids or medical equipment.
   Confirm that the equipment is medically necessary and not merely beneficial to general health.

5. Front-load a dependent’s eligible care.
   Review planned dental, vision, therapy, or medical treatment for a qualifying dependent. Schedule eligible services in 2026 when clinically appropriate and when the provider can complete and bill the service properly.

6. Charge eligible expenses by December 31.
   A credit-card charge made by December 31 generally belongs in the 2026 payment year. Keep the receipt and credit-card statement.

7. Review long-term care premiums.
   For 2026 planning, the IRS draft Instructions for Form 7206 list these age-based limits for qualified long-term care insurance premiums per covered person:

   • Age 40 or younger: $500
   • Age 41–50: $930
   • Age 51–60: $1,860
   • Age 61–70: $4,960
   • Age 71 or older: $6,200

   These limits apply before the 7.5% AGI threshold when premiums are considered for Schedule A. Verify the final 2026 IRS instructions before filing.

Use Bunching With Charitable Planning!

Medical bunching can be coordinated with charitable bunching. The objective is to concentrate deductions in one year and use the standard deduction in another year.

A donor-advised fund (DAF) style approach may allow a taxpayer to make several years of charitable contributions in one year, subject to the applicable charitable deduction rules. If substantial medical expenses are also paid in that year, total itemized deductions may be more likely to exceed the standard deduction.

A two-year planning cycle may look like this:

1. 2026: Pay eligible medical expenses, complete planned charitable contributions, and itemize if the calculation supports it.
2. 2027: Avoid unnecessary acceleration of expenses and use the standard deduction if it produces the better result.
3. Repeat only when the numbers support the strategy.

Do not contribute to a DAF or accelerate medical care without reviewing cash flow, clinical timing, charitable objectives, and tax projections.

Self-Employed Filers Have a Separate Route!

Self-employed health insurance premiums may qualify for an above-the-line deduction. This is separate from the Schedule A medical expense deduction and is often more valuable because it reduces adjusted gross income before itemized deductions are calculated.

Eligible taxpayers may include:

• A Schedule C or Schedule F filer with net profit.
• A partner with qualifying net self-employment earnings.
• A taxpayer using an optional method on Schedule SE (Form 1040).
• A more-than-2% shareholder receiving wages from an S corporation.

The deduction may cover medical, dental, vision, and qualified long-term care insurance for the taxpayer, spouse, dependents, and a child under age 27, even if that child is not a dependent.

Use Form 7206, Self-Employed Health Insurance Deduction when required. The deduction is limited by earned income from the relevant business. It is generally unavailable for months when subsidized employer coverage was available.

Do not claim the same premium above the line and again on Schedule A. Any eligible amount not claimed above the line may require a separate review for possible Schedule A treatment.

Keep Records That Support the Deduction!

Create one digital folder for the 2026 tax year. Include:

• Provider invoices and receipts.
• Insurance Explanation of Benefits (EOB) statements.
• Proof of payment.
• Credit-card statements.
• Prescription records.
• Medical mileage logs.
• Long-term care policy statements.
• Reimbursement information.
• Documentation showing whether premiums were paid pre-tax or after-tax.

Do not send every receipt with your tax return. Retain the records in case the deduction is questioned.

Coordinate Your Federal and Connecticut Returns!

Federal medical deductions are reported on Schedule A (Form 1040). Connecticut treatment is different. Connecticut generally does not use federal below-the-line itemized deductions, including the federal medical expense deduction, in the same manner.

New Haven residents and Connecticut filers should review the current Connecticut Department of Revenue Services instructions before claiming a state benefit. A federal Schedule A deduction does not automatically produce a Connecticut deduction.

The December 31 deadline applies to the payment year. It does not move because the federal return is filed later. Plan payments, documentation, and provider scheduling before the end of 2026.

Book a Year-End Planning Appointment!

Medical expense bunching works best when it is modeled before payment decisions are made. Jose’s Tax Service provides personalized federal and Connecticut tax planning for families, self-employed individuals, and small business owners in New Haven and beyond.

Book a tax planning appointment to review:

• Your projected 2026 AGI.
• Medical expenses already paid.
• Planned dental, vision, and medical costs.
• Charitable contributions.
• Standard deduction versus itemized deductions.
• Self-employed health insurance eligibility.
• Connecticut filing considerations.

Appointments are available virtually or in person, with same-day availability when scheduling permits. Jose’s Tax Service offers $0 upfront payment and year-round planning designed to help clients stay ahead of tax law changes.

For additional small-business resources, visit the Jose’s Tax Service Small Business Learning Center.

Category: Tax Planning | Tags: tax refund, personal finance, IRS tips, New Haven taxes