Tax preparation season continues and one of the often overlooked areas for deductions is the medical expense deduction for seniors.
How To Utilize Medical Expense Deduction
Taxpayers must itemize to utilize the medical expense deduction.
Deductions are itemized on Schedule A of your 1040 form and specific rules by the Internal Revenue Service applies to determine the eligibility of the expense and the threshold calculations. I. R. S. Publication 502 details the current deductible expenses.
Temporary Extension Of Threshold For Seniors
In 2013 Congress has increased the threshold of the medical expense deduction to 10 % from 7.5 % above the Adjusted Gross Income (AGI) for taxpayers 65 years and older. This is a temporary extension which will expire for the tax year ending January 1, 2017.
Example: A taxpayer with an AGI of $100,000 with legitimate medical and dental expenses can now claim a medical expense deduction of 10% if the medical expenses exceed 10% beyond the AGI. The current law for those under 65 is 7.5% beyond AGI. Taxpayers 65 years and beyond can partake of an increased substantial deduction.
It is always recommended a tax professional and/or the Internal Revenue Service is consulted as many variables enter into the calculations depending upon the medical condition, the medical expense and if a taxpayer is filing as a married couple or single.
Examples Of Deductible Medical Expenses
Below is a summary and restrictions and qualifications do apply. Consult the Internal Revenue Service and/or a tax professional for any income and deduction restrictions. The list is compiled as areas to examine for a medical expenses deduction.
- Premiums for Medicare
- Part B Medicare medical costs except hospital bills
- Part C Medicare Advantage policies
- Part D Medicare Prescription Drugs
- Premiums for Medigap insurance
- Premiums for long term care policies, restrictions apply
- Dental and vision out of pocket expenses
- Out of pocket lab fees
- Out of pocket wound care, supplies
- Mileage
- Caregiver expenses
The Internal Revenue Service Publication 554 Tax Guide for Seniors is a helpful publication to educate a taxpayer or tax preparer on the current I.R.S. laws which apply for seniors.
https://www.youtube.com/watch?feature=player_detailpage&v=TXqFjplp84c
What Bills Should I Keep?
In a nutshell, any bill which would possibly qualify for the medical expense. At tax preparation time it is much easier to have all the bills compiled than to try and locate bills from last year amongst the records. Your tax preparer would prefer you have too many receipts than lost receipts which may qualify.
Recommended Reading:
The Medicare Donut Hole 2015
Are Social Security Benefits Taxable?
Does Your Parent Qualify As A Tax Deduction?
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