Are you fearing pain in your pocketbook this tax season? You may be able to recoup costs with medical tax deductions. To cash in you must meet two criteria: You must itemize on your tax return and your out-of-pocket medical expenses – those not covered by insurance – must total more than 7.5 percent of your adjusted gross income (AGI). For example: If your AGI is $50,000 for the year, you may deduct any out-of-pocket costs in excess of $3,750.
Use these tips to maximize your medical tax deductions.
- Know what’s deductible. Generally, for medical expenses to qualify as deductions they must be ordered by a health professional to treat a diagnosed condition. An exception: Over-the-counter meds (except insulin) are not deductible. Fees for doctors, hospitals, nursing services, physical and occupational therapy, lab work, surgery, and transportation costs to appointments, are all deductible.
- Evaluate special items. Personal items, such as orthotic shoes, must pass the “but for” test, says IRS spokesperson Michelle Lamishaw, “which means that the taxpayer would not purchase the item but for the medical purpose.” In some cases, only part of the cost can be written off. A home modification may also be deductible, but if it increases your home’s value, such as an elevator, you must discount that increase.
- Check alternative therapies. Alternative treatments, such as acupuncture, are allowed, but supplements are not – unless ordered by a doctor. And although cosmetic surgery typically isn’t deductible, it is when it’s to correct deformities or repair injuries resulting from an accident or disease.
- Get your doctor’s orders in writing. It won’t guarantee a deduction will pass muster with the IRS, but it strengthens your case.
- Bundle your costs. Consolidating medical expenses into one year instead of two makes that 7.5 percent threshold more accessible, says Tony Davis, a CPA with LarsonAllen in Minneapolis who specializes in health care.
For a complete list of deductible medical expenses, visit the Internal Revenue Service’s Web site.
For example, if you were going to have corrective eye surgery and were contemplating medical improvements to your home, do them both in one year, instead of over two, which will help get you over the 7.5% threshold.
You still are required to report the expenses in the year paid, so this strategy is limited by what procedures/expenses for which you can adjust the scheduling or payment.
The walk-in tub has 3 speed jets that ciculate the water.
Does my walk-in tub qualify for a medical deduction for 2011 or can I write of the cost of the tub over a number of years?
I download it every year, and things change. Apparently no one in congress really cares about those they represent.
By the way don't feel too bad about your health cost, with long term care, and over $1,000 a month supplemental insurance we run over $20,000 a year in medical expenses. Over half of our income with the IRA with drawls.
I now have to pay for Medicare Part B coverage as well as the Part C and D we have with Kaiser Permanente Senior Advantage, totalling about $200/mo.
This change in coverage for me also made it financially necessary to change from self-injectable Enbrel to Remicade infusions.
Enbrel would have subjected me to fall into the Part D coverage gap within 3 months of the benefit year and increase the estimated annual out of pocket expenses to $8500 per year. (this does not inclusde premiums.) This would have been impossible to absorb on our unemployment/disability incomes, yet we did not qualify for any assistance.
I luckily have a decent understanding of coverage issues. I recalled that IV infusions administered in the doctors' office or infusion clinic are covered under Part B Medicare and are NOT subject to either the coverage gap or co-payment of Part D.
I hope this information is helpful to others out there.
Would life to have further information about this.
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