Most people forget about including annual out of pocket medical expenses on their income tax return. Out of pocket medical expenses are those that you paid for but were not reimbursed or not covered by your insurance carrier.
Currently, the IRS allows you to deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI) if you itemize deductions on a Form 1040 Schedule A. For example, if your AGI is $50,000 then any medical expenses above $3,750 (7.5% of $50,000) qualify for the deduction. If your total annual medical expenses were $6,000, then the tax deduction amount would be $2,250. For tax year 2013, the AGI threshold will increase to 10% (for taxpayers 65 and older, it stays at 7.5% through 2016) due to the health care reform act.
Some of the medical expenses that may qualify include doctors’ expenses, home health expenses and assisted living/nursing home expenses. Please review the IRS Publication 502 – Medical and Dental Expenses for a complete list of covered medical expenses that qualify for this deduction.
We are not tax accountants and do not file tax returns; talk with your tax planner to obtain specific details about this tax deduction. The purpose of this blog is simply to remind individuals to provide all their medical expenses for the year to their tax accountant. One of the services we provide our clients is an out of pocket medical expense report that includes how much they paid for medical expenses, home health expenses and facility expense as well as reminding them to include health insurance premiums paid for the year.
If you would like more information about this service or any of the other services we offer to provide “peace of mind”, please call our office to speak to one of our knowledgeable staff.