Medical Expenses Across the Border: Canada's Credit, the US Deduction, and the Treatment Paid for in the Other Country

Canada gives a non-refundable credit for medical expenses above a threshold; the United States gives an itemized deduction for medical expenses above a percentage of income. Both allow expenses incurred anywhere in the world, so a Canadian who pays for surgery in Florida claims it in Canada, and an American in Canada who pays private health premiums claims them in the US. The thresholds and the mechanics differ, and a cross-border family that files in both countries claims the same expense on both returns, each under its own rules.

Key takeaways

• Canada: the medical expense tax credit is 15% federally (plus provincial) of eligible expenses exceeding the lesser of 3% of net income or an indexed threshold (about $2,834 for 2025), for any 12-month period ending in the year. Eligible expenses include practitioner fees, prescriptions, dental, vision, private health plan premiums (including US plan premiums), travel for treatment more than 40 km away, and treatment outside Canada.
• US: medical and dental expenses are an itemized deduction on Schedule A to the extent they exceed 7.5% of adjusted gross income. Eligible expenses include doctors, hospitals, prescriptions, dental, vision, health insurance premiums (including foreign plans if they cover medical care), long-term care insurance within limits, and travel for treatment. Only itemizers benefit.
• Foreign treatment: both countries allow expenses paid to foreign practitioners and hospitals, provided the services would qualify domestically. Canada requires the practitioner to be licensed where the service was provided; the US requires the care to be legal where provided.
• Cross-border insurance: Canadian private health premiums (extended health, dental, travel medical) are eligible in Canada and deductible in the US; US health insurance premiums are eligible in Canada as a private health services plan premium if the plan qualifies, and deductible in the US.
• Health savings accounts and flexible spending: US HSAs and FSAs have no Canadian recognition; an HSA's growth is taxable in Canada for a Canadian resident, and contributions are not deductible.

Canada's credit

The credit is claimed on the T1 for expenses paid in any 12-month period ending in the tax year (the period can be chosen to maximize the claim). The threshold is 3% of net income or the indexed amount, whichever is less; only expenses above it generate the 15% federal credit plus the provincial credit. Expenses for a spouse and dependent children are combined on one return (usually the lower earner's, to minimize the threshold). Expenses for other dependants (parents, adult children) can be claimed with a separate threshold. The refundable medical expense supplement helps low-income working taxpayers.

Eligible expenses are listed in the Income Tax Act and CRA guidance: physician, dentist, and licensed practitioner fees; prescription drugs; hospital services; eyeglasses and contacts; hearing aids; certain medical devices; attendant care; nursing home fees for those with a disability certificate; travel expenses (transportation if treatment is more than 40 km away, plus meals and accommodation beyond 80 km); private health services plan premiums; and treatment outside Canada by a licensed practitioner.

The US deduction

Medical expenses are deductible on Schedule A only to the extent they exceed 7.5% of AGI, and only if the taxpayer itemizes (that is, if total itemized deductions exceed the standard deduction of about $15,750 single or $31,500 joint for 2025). For most taxpayers, the combination of the 7.5% floor and the standard deduction means medical expenses produce no deduction unless they are very large. Self-employed taxpayers deduct health insurance premiums above the line without the floor. HSA contributions are deductible and withdrawals for medical expenses are tax-free.

Eligible expenses parallel Canada's: diagnosis, treatment, prevention, prescriptions, insurance premiums covering medical care, long-term care premiums within age-based limits, travel for treatment (mileage at the medical rate, lodging up to $50 per night), and care provided abroad if legal where provided.

Cross-border cases

A Canadian resident with US treatment. A Canadian who pays for treatment in the US (surgery, a specialist, fertility treatment) claims the expense on the T1, converted at the rate on the payment date, provided the practitioner was licensed in the US. Travel to the treatment qualifies if more than 40 km from home and not available locally. No US filing.

A US citizen in Canada. Claims eligible expenses on the T1 under Canadian rules and on Schedule A under US rules (if itemizing). Canadian provincial health coverage means most basic care is not a paid expense; the claim is typically extended health and dental premiums, dental, vision, and prescriptions. Premiums for a Canadian private health plan are deductible in the US as health insurance.

A Canadian in the US. Claims US medical expenses on Schedule A (if itemizing); no Canadian claim after the departure year. In the departure year, expenses paid while a Canadian resident go on the final T1; expenses after the move on Schedule A.

US health insurance premiums for a Canadian resident. A Canadian snowbird who buys US health coverage, or a Canadian working in the US on a plan, can claim the premiums on the T1 as a private health services plan premium if the plan covers medical expenses that would be eligible in Canada. Travel medical insurance premiums qualify.

HSA. A Canadian resident with a US HSA (from a former US job) has an account Canada does not recognize: the growth is taxable annually in Canada, and withdrawals for medical expenses are tax-free in the US but the Canadian tax on the growth is not recoverable. Many movers spend the HSA down before moving.

Worked example

A Toronto couple with a combined net income of $180,000 pays $4,000 for a child's orthodontics, $2,400 in extended health premiums, $1,800 in prescriptions, and $9,000 for the wife's surgery at a Mayo Clinic campus in Florida plus $2,500 of travel.

• Canada. Claimed on the lower earner's return (net income $70,000; threshold $2,100): eligible expenses about $19,700 (the surgery converted at the payment-date rate, travel qualifying as treatment more than 80 km away); credit on $17,600 at 15% federal plus about 5% Ontario: roughly $3,500.
• US. No US filing for Canadian residents; nothing to claim.

Had the wife been a US citizen: the same expenses on Schedule A; with $130,000 USD of AGI the 7.5% floor is $9,750; about $4,700 USD deductible, worth about $1,000 at her marginal rate if she itemizes, which with Canadian tax deducted on Schedule A she likely does. The foreign tax credit reconciles the tax, not the deductions.

Official sources

"You can claim only eligible medical expenses on your tax return if you [...] paid for the medical expenses in any 12-month period ending in 2025." The expenses must be more than "the lesser of the following amounts: 3% of your net income (line 23600) or $2,834." — Canada Revenue Agency, Lines 33099 and 33199 – Eligible medical expenses you can claim on your tax return, https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html

"you may be able to deduct the medical and dental expenses you paid for yourself, your spouse, and your dependents during the taxable year to the extent these expenses exceed 7.5% of your adjusted gross income for the year." — Internal Revenue Service, Topic no. 502, Medical and dental expenses, https://www.irs.gov/taxtopics/tc502

Practitioner note

Canada's medical credit is claimed by most families; the US deduction is claimed by few, because the 7.5% floor and the standard deduction absorb it. For cross-border families the useful items are the premiums: US health insurance premiums are a Canadian medical expense, Canadian extended health premiums are a US medical expense, and both are missed more often than claimed.

See also: Planning a move? Start with the Canada-to-US tax checklist and browse every corridor by city, province, and state.

Next step

Fairlight prepares the medical expense claims on both returns, the cross-border premium treatment, and the HSA planning before a move to Canada. See cross-border pricing or book a call.