Here's how to maximize the forgotten tax deduction—medical expenses:
Share to linkedinMost taxpayers when asked will say that medical expenses aren’t deductible any longer or that you need a major amount of medical expenses to deduct them. As a result, they don’t pay attention to their medical expenses at tax time.
Suppose you have AGI of $80,000 and $15,000 of deductible medical expenses. If you itemize expenses, the floor for the deduction is 7.5% of $80,000, or $6,000. Subtracting $6,000 from $15,000 of medical expenses leaves 9,000. You can deduct $9,000 of medical expenses if you itemize expenses. You may deduct qualified medical expenses paid on behalf of you, your spouse and any dependents. A qualified medical expense is any expense incurred to cure or mitigate a disease or to affect a condition of the body. That covers more expenses than most people realize.
Of course, your out-of-pocket costs such as co-payments, coinsurance and deductibles for qualified medical care qualify. So do dental and vision expenses that aren’t covered by insurance. Hearing aids and related costs are deductible. Smoking cessation programs, whether or not prescribed by a doctor, and the cost of prescription drugs to alleviate the symptoms of nicotine withdrawal are deductible.
Capital expenditures and improvements for a home are deductible under certain conditions. The main purpose of the improvement must be medical care or treatment of a disease or medical condition. The expense is not deductible to the extent it increases the value of the home.Health club dues are deductible only to the extent they pay for medically-prescribed weight loss classes or to relieve or treat another specific medical condition.
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