Prescription drug co-pays are a legitimate tax deduction.
If you spend your own money to buy prescription medicine -- whether it's a co-pay or all your own money -- it's a legitimate tax deduction. You can also claim a deduction for insulin, even when you buy it without a prescription. Although your purchases are deductible, your total medical expenses must rise above the IRS minimum before you can write them off.
Medical Expenses
To deduct your medical expenses, you have to itemize deductions using Schedule A. Before claiming medical bills as one of the items, figure out your adjusted gross income on the front page of your 1040, then calculate 7.5 percent of that. If your AGI is $60,000, for example, 7.5 percent is $4.500. Subtract that from your medical expenses and you can claim whatever's left. If you're filing jointly, the cutoff is 7.5 percent of your joint AGI with your spouse.
Medication Deduction
You can include in your deduction whatever you pay for prescription medication -- or any other IRS-accepted medical expense -- not only for yourself but for your spouse and your dependents. To deduct your spouse's medical bills, you must have been married to him either at the time he received the treatment or the time you paid for it. If you pay for his medicine, you can deduct the cost even if you and your spouse file separate returns.
Expenses
If your family's bills for prescription medication -- over-the-counter drugs don't count -- don't pass the 7.5 percent threshold, check the IRS' medical-expenses instructions for other items you can deduct, such as insurance premiums. The IRS also lists items that aren't deductible: You can't deduct drugs imported illegally from overseas, for example. If you include invalid items when you work on your taxes, you might assume you're above 7.5 percent when you're not.
Considerations
If your insurer reimburses you for a medical service with more money than you spent, you have to deduct the excess from your other expenses. If you have a tax-deductible health savings account or flexible spending account, you can't claim any drugs or other expenses that you pay for using account funds. You can deduct birth-control pills if you have a prescription for them; you can't deduct marijuana, even if you have a doctor's prescription.
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