Posted by Abundant Wealth Planning LLC

Can You Claim Your Medical Expenses on Your Taxes?

Can You Claim Your Medical Expenses on Your Taxes?

If you or your family members have ever been to the hospital or had other expensive medical or dental bills, keep these receipts as they can help you lower your taxes. You can use it to deduct medical expenses and get the most out of them.


What is the Medical Expense Deduction?

For returns filed in 2020, taxpayers can deduct unpaid eligible medical expenses greater than 7.5% of their adjusted gross income for 2019. Therefore, if your adjusted gross income is $ 40,000, and anything beyond the first $ 3,000 of medical bills or 7.5% of your adjusted gross income can be deductible.

This implies that if you had $ 10,000 in medical bills, $ 7,000 could be tax-deductible.


What Types of Medical Expenses are Deductible?

IRS publication 502 has the full list, but that's just what counts as medical expenses.

  • Acupuncture

  • Admission and transportation to medical conferences on illnesses you have, your spouse or dependents (but meals and accommodation don't count)

  • Assistance in hospitals and retirement homes

  • Dentures, glasses or reading glasses, contact lenses, hearing aids, crutches, wheelchairs, and service animals

  • Drug abuse programs, including smoking cessation

  • Health care premiums or long-term care insurance if your employer does not pay and you pay your pocket money after tax.

  • Insulin and prescription drugs

  • Payments to physicians, dentists, surgeons, chiropractors, psychiatrists, psychologists, and other health professionals

  • Transportation costs to and from health care

  • Weight loss programs for clinically diagnosed conditions, including obesity (but, in general, diet meals and gym fees don't count)

Other rules for deducting medical expenses

  • You can only include medical expenses paid during the year

  • You cannot include the expenses that were reimbursed to you (therefore, if the insurance paid the bill, it is not deductible)

What is not deductible?

  • Funeral or burial expenses

  • Over-the-counter medications

  • Toothpaste, hygiene products, and cosmetics

  • Vacation

  • Most cosmetic surgeries

  • Non-prescription chewing gum and nicotine patches


How to Deduct Medical ExpensesFollow the Steps Below.


Itemize On Your Taxes

First, you will need to itemize instead of making use of the standard deduction. It may mean spending more time preparing your taxes, but if the standard deduction is less than itemized deductions, you still need to list and save money. If the standard deduction is more than itemized deductions, take the standard deduction and save time. 


Use Schedule A

Schedule A lets you do the maths you need in calculating the deduction. Your tax specialist can guide you through the steps.


Claiming Medical Expenses Taxes for Couples? Consider Your Filing Status.

Filing separately if you are married can result in a higher deduction for medical expenses, but it is risky because you could lose other tax deductions. Suppose your spouse racked up $ 6,000 in medical bills the previous year. If you are submitting a joint return, and the adjusted gross combined income is $ 100,000, only the portion of the medical expenses that exceed 7.5% or the portion that exceeds $ 7,500 will be deductible. Therefore, in this scenario, none of the $ 6,000 in medical bills can be deducted.

Now, suppose you file separately. Your AGI is $ 75,000, and your spouse is $ 25,000. Since the medical bills belong to your spouse, he or she can deduct any amount greater than 7.5% of $ 25,000 AGI or $ 1,875. This would mean a tax deduction of $ 4,125 to complete a separate return.


Keep Good Records

Keep those bills and ask the pharmacy or other health care providers for registrations to fill in the gaps. This will help in your quest for taking this deduction.


State Thresholds for Deducting Medical Expenses

Your state may have a lower AGI threshold, which can save you money. For example, in some states, the AGI threshold for deducting medical expenses is only 2%, which means that taxpayers could get a reduction in state income taxes, even if they cannot get one on their federal income tax.

It is important to know the rules in your state; otherwise, you could leave some money on the table.


FOR MORE INFORMATION OR TO MAKE AN APPOINTMENT WITH US TO SEE HOW WE CAN HELP WITH YOUR TAX FILING NEEDS, PLEASE CONTACT Abundant Wealth Planning, LLC., BY CLICKING THE BLUE TAB ON THIS PAGE.


THANKS FOR VISITING.



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