Tax questions are inevitable, no matter how many times you have filed your federal income tax return. Each year changes are made to the Internal Revenue Service’s (IRS) tax code.
These yearly changes can be confusing unless you work with taxes every day. One deduction that can leave the average taxpayer scratching their head in puzzlement is what medical expenses qualify as a deduction on your tax return.
Help is as close as your telephone, computer, or mailbox. The IRS prepares various publications with explanations and examples of qualifying deductions. Publication 502 answers questions about what medical expenses qualify as a deduction on your 1040 tax return.
The publication is available on the IRS website at http://irs.gov. Paper copies can be ordered from the IRS. If you encounter questions, you may also call the IRS help line for answers and explanations. Expect a long wait time, especially if you are calling near the April 15 tax filing deadline.
Some basic expenses that can be eligible for a tax break include the premium you pay for your health insurance, unless you opted through your employer to have that cost subtracted from your salary as a pre-tax savings.
Doctor fees, medical tests, special equipment, prescription medicines, bandages, health aides and transportation to and from locations for medical treatment also meet the IRS criteria for a deduction.
Transportation is an often overlooked deduction. Transportation costs include a mileage rate of 16.5 cents per mile for use of your personal vehicle. You can also tally any tolls and parking fees incurred on your trip to a medical facility or doctor for treatment.
Expenses incurred as preventative health measures may land you in an audit if you include them on your tax return. Charges not included on the list of deductible expenses include health club memberships, exercise and fitness clothing, running shoes and over the counter vitamins and supplements.
You can’t deduct the salary you pay your personal trainer, but you can deduct any payments you make out of pocket to a physical therapist if your doctor ordered the treatment as part of your care plan.
Any payments you make up front, but receive reimbursement from your insurance plan are not deductible under the current IRS code.
Other eligible deductions that fall under medical include eyeglasses, dental expenses, wheelchairs, artificial limbs and teeth, and breast reconstruction if you have been treated for breast cancer. If you want to go from an A-cup to a C-cup, you can’t deduct costs associated with that procedure.
The list of allowable deductions is long. You should research it carefully to make sure you include any items which are eligible for the tax deduction. A single expense can push your medical costs over the threshold to help reduce your tax bill.
Remember, your total medical expenses must equal a minimum of 7.5 percent of your Adjusted Gross Income (AGI,) or you will not be able to deduct them.
Your AGI is the difference between the total amount of money you earned for the year (your gross income) and the amount of annual income you have left after all of your deductions are taken away.
Your tax bill is based on your AGI. This figure will tell you how much you owe in taxes or how much of a refund you will get back if you had too much money withheld from your paycheck.
Preparing your 1040 along with medical costs will take time.
Start early and do your research thoroughly. If you have questions check them with your tax professional, Pub 502 or through the IRS hot line.
Embrace the challenge of filing your tax return and relax April 16th.