09 Feb Tax Time is Coming
As we approach the April 15th deadline for filing our federal income taxes, we wanted to share some information about how to lower your taxes by claiming medical and dental expenses.
Most of us pay for health insurance premiums, co-payments, deductibles, and co-insurance/cost-share amounts for our medical care throughout the year. And some of us pay those costs for dental care, too.
Are any of those expenses tax deductible? They may be! Here are a few tips from the IRS on claiming medical and dental expenses:
- You must itemize your taxes. If you want to claim your medical and dental expenses that you paid for in 2015, you have to itemize deductions on your federal tax return. If you take the standard deduction, you can’t claim these expenses.
- Which costs to include? You can include most medical and dental costs that you paid for yourself, your spouse and your dependents. Exceptions and special rules apply. Costs reimbursed by insurance or other sources do not qualify for a deduction.
- Which expenses qualify? You can include the costs of diagnosing, treating, easing or preventing disease. The costs you pay for prescription drugs and insulin qualify. The costs you pay for insurance premiums for policies that cover medical care qualify. Some long-term care insurance costs also qualify. For more examples of costs you can and can’t deduct, see IRS Publication 502, Medical and Dental Expenses.
- Travel costs count. Do you have to travel to get medical or dental care? You may be able to claim travel costs such as public transportation, ambulance service, tolls and parking fees. If you use your car, you can deduct either the actual costs or the standard mileage rate for medical travel.
- AGI threshold. Include all the qualified medical and dental costs that you paid for during the year. However, you can only deduct the amount that is more than 10% of your adjusted gross income.
- Threshold for age 65+. If you or your spouse is age 65 or older, the AGI threshold is 7.5% of your AGI. This threshold applies through Dec. 31, 2016.
- Use the tool. You can use the Interactive Tax Assistant tool on IRS.gov to see if you can deduct your medical expenses. The tool can answer many of your questions on a wide range of tax topics.
It is good practice to keep records of any expenses you chose to deduct for a minimum of three years.
Don’t want to read the rules? Watch this video from the IRS: https://www.youtube.com/watch?v=TXqFjplp84c
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