How to Document Medical Expenses for Taxes

Ensure you have the proper documentation in case of an IRS audit.
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The Internal Revenue Service (IRS) recommends keeping good records, but it does not require businesses or individuals to maintain financial records in any particular form. If you claim medical expenses as a deduction on your taxes, you need to keep documentation to use in case of an audit. In an audit, you must prove to the IRS that the expenses you have claimed are valid, or you may be required to pay additional income tax.


Step 1

Label the sections of an accordion file or separate file folders with the categories of medical expenses that you will be able to claim. You will need a section for medical bills, dental bills, prescriptions, medical insurance and transportation costs. Depending on the types of medical care that you and your dependents use, you may need additional sections. If, for example, your child's doctor prescribes tutoring, add a section for educational expenses. Other possibilities include legal fees incurred to obtain appropriate treatment and fees for medical conferences.


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Step 2

Add notes to every written record of a medical expense when you receive it. Each document should identify who incurred the expense--you or one of your dependents. The record should also include the name and address of the provider, the date of the expense, type of expense and cost. The IRS recommends keeping track of expenses when they occur. Written records include items like receipts, bills, sales slips, canceled checks, credit card statements and records of electronic transfers.


Step 3

Enter the details of the medical record in your spreadsheet or tracking application. You can set up a paper-and-pencil spreadsheet or use computer software to track medical expenses. The spreadsheet must include a column for each of the details you have noted on the written record. Organize the columns in a way that makes sense to you. You might, for example, put the date in the first column, then the name of the person associated with the expense, the type of expense and so forth. Spreadsheet applications or specialized tracking software have several advantages over a handwritten record. For example, most software will allow you to reorganize the order of the columns and sort the information by a specific factor. A computer tracking system will also give you totals automatically.



Step 4

Place the written record of the expense in the appropriate section of your files. Keep the records in order by date within each file section by consistently placing each new record at the front or the back of the file.


Keep your files in a safe place.

If you have a scanner, you can create a digital backup of your files by scanning each document before you file it. Organize the scanned documents in a set of files on your computer that duplicates the organization of your paper files.



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