Can You Deduct Dental Insurance Premiums on Taxes?

Dental insurance may help you save hundreds or even thousands of dollars in healthcare costs. A dental policy may cover the entire cost of routine dental procedures, motivating you and your family to see your dentist regularly for future care. Some dental insurance policies may also help make major dental procedures, such as root canals, more affordable. Fortunately, dental premiums might make a significant tax deduction, too. Learn how protecting your smile might help lower your taxes due or maximize your tax refund.

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Understanding dental insurance and tax deductions

If you itemize your tax deductions, you may be able to add your dental insurance premiums to your qualifying medical expenses. You can apply premiums paid with post-tax dollars to your calculations.

What is dental insurance?

Dental insurance covers professional dental care, also called oral care. It can help pay for expenses related to services such as routine dental exams and cleanings. Depending on policy stipulations, dental insurance may cover certain costs for periodontal care, which treats gum disease. In some cases, policies will cover certain major dental expenses after a waiting period.

The health of our mouths is intricately tied to our overall physical and mental health. However, dental care cost barriers are often greater than costs for other kinds of medical services. Per-person dental costs have risen 30% in the U.S. over the past 20 years. Dental insurance can help lower out-of-pocket expenses for emergency dental care and maintaining oral health, whether you choose a preventive or comprehensive plan.

What are tax deductions?

Tax deductions are expenses that a taxpayer can subtract from their taxable income. Also called tax write-offs, tax deductions reduce the income taxes owed. The Internal Revenue Service (IRS) allows taxpayers to take a standard deduction, which changes every year. The standard deduction is the total of the basic standard deduction plus any additional standard deductions for age and/or blindness. A taxpayer can itemize deductions if the total exceeds the standard deduction.

Certain people must itemize their deductions if:

• They are married filing separately and the spouse itemizes deductions
• They were a nonresident alien or dual status alien during the tax year (with some exceptions)
• They are filing a return for a period of fewer than 12 months due to changes in annual accounting periods

How tax deductions work for medical expenses

If you are itemizing deductions, the IRS lets you deduct medical and dental expenses you paid for yourself, your spouse, and your dependents. However, you can only deduct the part of expenses greater than 7.5% of your adjusted gross income (AGI). The deductions only apply to costs not covered or reimbursed by insurance or other sources.

You can claim certain medical and dental expenses on Schedule A of IRS Form 1040. You can only deduct dental costs paid in the year you are filing taxes. You may be able to file an amended tax return to claim dental expenses, such as dental insurance premiums, for previous years.

Criteria for deducting dental insurance premiums

IRS Publication 502, Medical and Dental Expenses, discusses the itemized deduction for medical and dental expenses. It details what and whose expenses you can or cannot add in tallying the deduction. It also explains how to enter the deduction on your tax return. The publication states, "Medical expenses include dental expenses, and in this publication, the term' medical expenses' is often used to refer to medical and dental expenses."

The IRS also explains that medical expenses include preventing, diagnosing, and treating disease. The IRS also considers payments for legal medical services, equipment, and diagnostic services as medical services for tax purposes. Generally, you can include medical and dental expenses incurred by yourself, your spouse, and dependents. You must have been married at the time of the expenditures on behalf of a spouse. A dependent must have been your dependent when you paid the expenses.

When dental insurance premiums are tax-deductible

IRS Publication 502 further states, “Medical expenses include the premiums you pay for insurance that covers the expenses of medical care…” Since dental care expenses are medical expenses, dental insurance premiums are tax-deductible. You must have paid for your premiums with post-tax dollars. Dental premiums paid with funds from a Health Savings Account (HSA) or Flexible Spending Account (FSA) would not qualify for a tax deduction.

Dental insurance may be tax deductible if you itemize deductions. It must be used for services to prevent or alleviate dental disease, not cosmetic purposes. The total of all your qualifying medical and dental expenses and dental premiums must be above 7.5 of your adjusted gross income.

Limits and thresholds

The Internal Revenue Service specifies that you can deduct medical and dental expenses, such as dental insurance, you paid during the taxable year. However, these expenses must add up to over 7.5% of your AGI for that year. If your itemized deduction exceeds the standard deduction, applying the itemized deduction will reduce the taxes you owe, if any.

You can deduct medical and dental expenses only if they exceed 7.5% of your AGI. Low AGI or high medical costs may help you meet this threshold. To determine the deductible amount for your tax return, you must determine your AGI and multiply that by 7.5%. For example, if your AGI is $60,000, the first $4,500 of your unreimbursed medical expenses will not count. You can deduct whatever you spend beyond that $4,500.

How to claim dental insurance as a tax deduction

Itemizing deductions such as dental premiums may benefit you financially if your overall deductible expenses went over the 7.5% threshold for the tax year. The IRS Interactive Tax Assistant can help you understand whether you can deduct premiums from your dental insurance on your return.

While taking the standard deduction on your tax return might be easier, itemized deductions might work better for you. Consider these potential advantages and drawbacks of both options:

Whichever deduction you choose, it may still be helpful to keep track of medical and dental expenses such as dental insurance premiums.

Filing your tax return

When filing your tax return, you will need to complete and attach Schedule A of IRS Form 1040 for reporting itemized deductions. On the IRS’s list of includible medical and dental expenses, insurance premiums for medical and dental care come first.

Schedule A, titled “Itemized Deductions,” explains how to determine and record the medical and dental expense deductions. You will calculate this deduction in the first section of the form.

The IRS 2023 Instructions for Schedule A provides further details on adding dental expenses to your total medical expenses. The process follows:

• On Line 1, enter the total unreimbursed medical and dental expenses. Remember to include amounts you paid for dental insurance coverage on behalf of yourself, your spouse, any dependents, a child not claimed as a dependent due to divorce or separation, and a nondependent child under age 27 if they were under family coverage and premiums remained the same.
• On Line 2, enter your AGI from line 11 of Form 1040.
• On Line 3, enter the total of Line 2 multiplied by 7.5%.
• On Line 4, subtract Line 3 from Line 1 and enter the difference. If Line 3 is greater than Line 1, enter -0-.

Documentation and record-keeping

The IRS urges taxpayers to keep documentation of deductible expenses. These items can help ensure accurate calculations for itemizing deductions and serve as proof of expenditures in case of a tax return audit.

Maintain records of dental insurance payments made throughout the year on behalf of all qualifying household members. Physical or online documents should show payment dates, amounts paid, and a description of the expense. Keep these kinds of records handy for easier calculating at tax return time:

• Receipts
• Dental insurance company statements
• Canceled checks
• Credit card receipts or statements

Can you deduct dental insurance if paid through an employer?

According to Publication 502, employer-paid dental insurance premiums are not tax deductible unless included in box 1 of your Form W-2, Wage and Tax Statement. If your job applies the value of unused sick leave toward the cost of continuing participation in the company’s health insurance plan, you can use the cost of continuing participation as a deductible medical expense. However, if your employer applies the value of unused sick leave toward the cost of your continuing participation in the company’s health plan and you cannot receive cash instead, then your cost is not a qualifying medical expense.

Only the dental insurance premiums paid with after-tax dollars can go toward your deduction. An employer might be paying premiums with pre-tax dollars, which are not included in your taxable income reported on your W-2. In that case, you could not deduct those premiums, as that would yield a double tax benefit.

Are out-of-pocket dental expenses deductible?

Deductible out-of-pocket medical expenses include taxpayer-borne costs involved with preventing or treating health conditions such as dental disease. They are not reimbursed by insurance or compensated by any other source. Cosmetic-related costs, such as teeth whitening, are not tax-deductible.

One example of deductible out-of-pocket dental expenses could be dental premiums. Other potentially deductible dental expenses include costs for:

• Fillings
• Sealant application
• X-rays
• Dentures
• Braces
• Fluoride treatments for tooth decay prevention
• Coinsurance
• Copayments
• Costs of dental care before meeting a deductible, if you have one

Deducting dental insurance for self-employed individuals

The IRS allows some self-employed individuals to deduct dental insurance for themselves, spouses, and dependents if they had a net profit for the tax year. Those who qualify for a deduction can take it on Form 1040 or 1040-SR. Otherwise, they must use Form 7206 to calculate the amount of the self-employed health insurance deduction they can report on Form 1040’s Schedule 1.

You cannot claim the deduction if the deduction is greater than the self-employed income. Further, you cannot deduct dental insurance if your business generated a tax loss for the year. Self-employed individuals cannot deduct dental insurance premiums for any month, and neither they nor their spouse could have participated in another health plan.

Bottom line

The IRS often allows taxpayers to deduct dental insurance premiums on tax returns. The IRS website can provide further guidance to help you take advantage of any deductions you may be entitled to. Smile — your dental premium may be tax-deductible after all.