When I started working on Find Your Deductions, one pattern kept emerging in my research: people with significant medical expenses were consistently leaving money on the table at tax time. Not because they were trying to avoid legitimate deductions, but because they simply didn't understand the rules or lacked a system to track everything properly.
The medical deduction opportunity is massive, yet most people either don't qualify due to poor record-keeping or don't even know they should be tracking these expenses in the first place.
The 7.5% Rule That Trips Everyone Up
Here's the foundation you need to understand: medical expenses only become deductible when they exceed 7.5% of your adjusted gross income (AGI), and only if you itemize your deductions instead of taking the standard deduction.
Let me illustrate with a fictional example. Consider Sarah, a freelance graphic designer earning $60,000 annually. She'd need more than $4,500 in qualifying medical expenses (7.5% of $60,000) before any deduction kicks in. If she spent $8,000 on medical expenses, she could deduct $3,500—potentially saving her $840 in taxes at the 24% bracket.
But here's where it gets interesting: Sarah might also have $2,200 in health insurance premiums as a self-employed person, $400 in prescription costs, and $300 in physical therapy sessions. These often-overlooked expenses could bring her total to $10,900, making her potential deduction $6,400 instead of $3,500.
The problem? Without systematic tracking throughout the year, most of these expenses get forgotten by tax time.
The Medical Expenses People Always Miss
When I designed the Smart Analyzer feature for Find Your Deductions, I focused on catching the medical expenses people typically overlook:
- Health insurance premiums (especially critical for self-employed individuals)
- Dental and vision care beyond routine cleanings and checkups
- Mental health services including therapy and counseling sessions
- Medical equipment like blood pressure monitors, diabetic supplies, or mobility aids
- Transportation costs for medical appointments (22 cents per mile for 2023)
- Prescription glasses and contact lenses
- Alternative treatments like acupuncture or chiropractic care when medically necessary
- Over-the-counter medications prescribed by a doctor
- Medical conferences or seminars related to chronic conditions
The Smart Analyzer continuously monitors your connected accounts, automatically categorizing these expenses with confidence ratings. It's designed to work like having a tax professional watching your spending all year long.
Why Year-Round Tracking Changes Everything
I built Find Your Deductions around continuous, automated tracking because scrambling through receipts in March is both stressful and ineffective. The moment you make a medical purchase, the system is designed to:
- Identify the transaction through secure Plaid integration
- Categorize it automatically using customizable smart rules
- Process forwarded email receipts, extracting relevant data and matching it to transactions
- Assign confidence ratings so you know which expenses are solid versus questionable
The email receipt feature could be a game-changer. Instead of keeping paper receipts or hunting through email later, you'd simply forward medical receipts to your unique Find Your Deductions email address. The system would extract key information and link it to the corresponding bank transaction automatically.
When Medical Deductions Actually Make Sense
Not everyone should focus on medical deductions. If your medical expenses don't exceed 7.5% of your AGI, or if the standard deduction exceeds your total itemized deductions, medical tracking might not be worth the effort.
But certain situations make medical deductions particularly valuable:
- High-earning individuals with significant medical expenses (higher thresholds but also higher tax rates)
- Self-employed people who can often deduct health insurance premiums above-the-line
- Families dealing with chronic conditions where expenses accumulate consistently
- Anyone facing unexpected major medical events like surgery or extended treatment
The Potential Impact of Better Tracking
Consider David, a fictional small business owner whose daughter was diagnosed with Type 1 diabetes. Between insulin, testing supplies, doctor visits, and a continuous glucose monitor, his family's medical expenses could jump to $12,000 annually.
With an AGI of $85,000, David's threshold would be $6,375. With proper tracking, he might capture not just the obvious diabetes-related costs but also:
- Mileage to specialist appointments (47 miles roundtrip, twice monthly)
- A medical alert system for his daughter
- Specialized summer camp for diabetic children
- Nutrition counseling sessions
If his total qualifying expenses reached $18,400, this could create a $12,025 deduction. At his tax rate, this might save him over $3,000 annually—more than enough to pay for medical equipment that dramatically improves his daughter's quality of life.
Why I'm Building This Tool
As a software developer who struggled with expense tracking myself, I kept thinking: this should be automated. Why should people manually categorize expenses when technology can do it better and more consistently?
But I also realized that peace of mind matters as much as automation. That's why Find Your Deductions includes confidence ratings for each expense. When you're preparing your taxes, you want to know which deductions are bulletproof and which might need additional documentation.
The smart rules system is designed to learn your patterns over time. If you regularly visit the same physical therapist, the system would automatically categorize those transactions. If you always buy diabetic supplies from the same pharmacy, it would recognize the pattern and apply the correct category with high confidence.
The Bigger Picture
Medical deductions aren't for everyone, but for those who qualify, systematic tracking could make the difference between claiming a few hundred dollars and potentially saving thousands.
I'm building Find Your Deductions because I believe everyone deserves access to the same level of expense tracking that wealthy individuals get from their full-time accountants. The tool is designed to pay for itself by finding deductions you'd otherwise miss.
When tax season arrives, instead of scrambling through receipts, you'd have a comprehensive report with all supporting documentation, ready to hand to your accountant or upload to your tax software. Bank-level security would protect your data, and the system works for both personal and business medical expenses.
The goal is simple: turn tax complexity into automated simplicity, ensuring you never leave money on the table again. Medical expenses represent one of the most overlooked opportunities in personal tax planning, and with proper tracking, they could provide significant relief during already challenging times.
The key is starting now, not waiting until next April to wish you'd been more organized.