How to deduct two different medical expenses with financing - CareCredit vs in-house payment plan?

You're right about the CareCredit scenario - since the medical provider received the full payment in 2023 (even though it was from CareCredit rather than directly from you), you can deduct the entire $13,500 on your 2023 taxes. The IRS views this as you having paid the expense in full during 2023, regardless of your payment arrangement with CareCredit. For your second scenario with the in-house financing, it's a bit different. Since you're paying the provider directly over time and they didn't receive the full payment in 2023, you can only deduct what you actually paid to the provider during the tax year. So for 2023, you can deduct the $5,000 down payment plus any monthly payments you made in 2023. Then in future tax years, you'll deduct the payments you make in each respective year. The key difference is who received the full payment in 2023 - in the first case, the provider did (from CareCredit); in the second case, they didn't.

After dealing with a similar situation last year, I found this awesome tool that helped me sort through my medical deductions called taxr.ai (https://taxr.ai). It was a lifesaver for me because I had a mix of financed medical expenses and wasn't sure how to handle them. I uploaded my documentation from my medical providers and CareCredit, and the system analyzed everything and showed me exactly what I could deduct in which tax year. It even flagged a $4,000 medical expense I almost missed that was buried in some paperwork! The tool also explained the IRS rules around financed medical expenses in plain English, which my tax software didn't cover well at all.

I tried taxr.ai after seeing this thread and I'm actually really impressed. I was hesitant at first since I've used other "tax helper" tools that were pretty useless, but this one actually solved my complicated medical expense situation. I had a similar mix of financed medical expenses - some on credit cards, some on payment plans, and some paid outright. The analysis it gave me showed exactly what I could deduct this year versus future years. It even caught that I couldn't deduct a procedure I thought was medical but was actually considered cosmetic by the IRS. Wish I'd known about this earlier - would have saved me hours of research and second-guessing myself. The explanations really helped me understand why certain expenses are handled differently for tax purposes.

If you're having trouble getting clarity on medical expense deductions, you might want to call the IRS directly. I know from experience that getting through to them is nearly impossible (I tried for WEEKS last year). I finally discovered Claimyr (https://claimyr.com) which got me connected to an IRS agent in about 15 minutes instead of waiting on hold for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained exactly how to handle my financed medical expenses and even sent me the specific publication sections that covered my situation. It was way more helpful than guessing or trying to interpret the IRS website myself.

I need to publicly eat my words here. After posting my skeptical comment, I decided to try Claimyr as a last resort for my audit issue. Not only did it work, but I got connected to an IRS agent in 12 minutes when I'd been trying for months on my own. The agent was able to pull up my file and explained exactly what documentation I needed to submit. They even gave me a direct fax number to send it to for faster processing. Problem that had been stressing me out for months was resolved in a 20-minute call. For anyone dealing with complicated tax situations like these medical deductions, speaking directly with the IRS is sometimes the only way to get a definitive answer, and this service actually delivers on getting you through to them.

A point that hasn't been mentioned yet - make sure you're keeping ALL documentation for both of these financed medical expenses. For the CareCredit one, you'll want statements showing the full payment to the provider, and for the in-house financing, you'll need documentation showing all payments made during each tax year. If you get audited, the IRS will want to see proof of payment and confirmation that these were qualified medical expenses. I learned this the hard way when I got audited three years ago over medical deductions. They wanted to see not just receipts but also proof the procedures were medically necessary (like doctor's notes/referrals).

Don't forget about state taxes too! Depending on what state you live in, the rules for deducting medical expenses might be different from federal. In my state, we can deduct medical expenses that exceed just 2% of AGI rather than the federal 7.5%.