Medication saves lives – while also costing a lot of money! So it’s not a bad idea to deduct them on your tax return to try to get some of those expenses back. Generally, medications are tax-deductible but some conditions apply. These medications must of course be prescribed by a doctor or alternative practitioner, and you should keep all receipts on hand in case the tax office (Finanzamt) requests proof.
The medication costs must have been paid by the patient up to a certain amount determined by marital status and income. You can find a detailed example of this calculation below.
Can medications without a prescription be deducted?
Prescriptions are necessary to deduct medications from your taxes so that it can be verified that they are medically necessary – however, if you have a medical note stating that your prescription-free medication is necessary prior to purchase, this is also valid. Medical notes received after the purchase may not be recognized by the tax office. If a certain medication must be purchased regularly, it doesn’t have to be verified by your doctor before each purchase. For example, headache tablets, nasal spray, cough syrup, etc are generally tax-deductible.
Medication costs are lumped together with your other medical expenses on your tax return. Here are some additional medical costs that can be deducted:
- Prescription medications
- Expenses from hospital stays
- Therapies (speech therapy, physical therapy, physiotherapy, etc.)
- Dentures & professional teeth cleaning
- Medical foot care (including orthopedic insoles and shoes)
- Commuting costs to the doctor
- Eye care such as glasses, contact lenses, and laser eye surgery
- Hearing aids
- Walking aids / wheelchairs
Please note that it is important that you provide proof of these being medically necessary and only the costs not reimbursed by your health insurance can be claimed on your tax return.
Deducting certain costs as income-related expenses (Werbungskosten)
Employees who have bought disinfectants and masks to protect themselves against the Corona Virus while traveling to work and being in the office can deduct these costs as income-related expenses.
Other medical expenses can also be deducted the same way if they are linked to your professional activities or occupational illnesses. Expenses deducted as income-related expenses are not subject to a limit.
Reasonable burden limit: Deducting non-work-related medical expenses
If you can’t deduct medical expenses as income-related expenses, they can be deducted as extraordinary expenses (außergewöhnliche Belastungen) – there is, however, a catch. Extraordinary expenses can only be deducted once they exceed your individual “reasonable buden limit” which is determined by your income, number of children, and marital status.
The reasonable burden limit is regulated in section 33 of the Income Tax Act (Einkommenssteuergesetz) and amounts to between 1% and 7% of your total income. The Bavarian State Tax Office even developed a calculator to help you estimate your personal reasonable burden limit.
- A family with two children and an income of 55,000 euros has a reasonable burden limit of 1,535 euros.
- A single person without children and an annual income of 36,000 euros has a reasonable burden limit of 2,006 euros.
Extraordinary expenses are not limited to medical costs – they can also include expenses incurred from a disability, domestic care costs, groundwater damage costs, expenses incurred from natural disasters or theft, etc. Costs to remove toxic pollutants from your home are also accepted under certain conditions, as well as funeral expenses if the funeral remains below a certain limit and cannot be paid from inheritance.
Tip: If you can schedule certain non-emergency surgeries to be completed in the same year, you can receive a tax advantage by the costs pushing you over your reasonable burden limit thus allowing them to be deducted.
Where exactly do I enter medication on my tax return?
Medical expenses must be entered on the extraordinary expenses form (Anlage außergewöhnliche Belastungen) on line 13. Submitting your tax return on paper can be extremely confusing, time-consuming, and frustrating – with wundertax’s simple tax interview, you can simply enter your values into our tax interview and we will do all the busy work for you – complete your tax return with us in just 17 minutes on average. Our technical customer service is also always happy to answer any questions you might have.