Starting with your 2013 tax return, the floor for claiming medical expenses has gone up to 10% from 7.5%. -Photo by epSos.de at Flickr.com
______________________________________________________________________________
Do you claim medical expenses on your tax return? If you do, then you need to know that the rules changed for 2013.
It used to be that you medical expenses had to be higher than 7.5% of your adjusted gross income in order for you to be able to claim them. So if you made $50,000 a year, your medical expenses would have to be higher than $3,750 before you could claim anything for that. Starting with your 2013 tax return, the floor for claiming medical expenses has gone up to 10%, so now your medical expenses would have to be higher than $5,000 in order to claim anything.
So let’s say you had major surgery this past year. After all the insurance reimbursements, you were still out of pocket $7,000. Using the above example, you’d only be able to claim $2,000 of medical expenses on your tax return.
Even if your medical expenses were over 10% of your income, you still need enough other deductible expenses to make your medical expense deduction worthwhile. Let’s say you’re single and your standard deduction for 2013 is $6,100. Suppose you had $3,000 withheld for your state income tax, you gave $1,000 to charity, and you had the $2,000 of medical expenses that you could claim. That only totals $6,000—you’re still better off claiming the standard deduction of $6,100. Keep that in mind as you gather up your medical receipts; it’s not just having enough medical expenses to deduct, it’s having enough expenses overall to make it worth your while. This is commonly referred to as itemizing deductions.
If you, or your spouse, are age 65 or over, there’s a temporary exception to the 10% rule. You can continue to use the medical expenses that exceed 7.5% of your adjusted gross income. You can keep doing that all the way through 2016, after that, you’ll also have to use the 10% threshold.
Please check out my post about maximizing your medical expense deduction: http://robergtaxsolutions.com/2013/02/maximizing-your-medical-expense-deduction/
Even if you can’t claim your medical expenses with your itemized deductions on schedule A, some people are entitled to claim their medical expenses elsewhere. You don’t want to miss out on any deduction that available to you.
______________________________________________________________________________
Sandra Dee or Sally Field?
When I was young, medical expenses were deductible to the extent they exceeded a mere 3 percent of adjusted gross income. I guess I shouldn’t have expected that standard to remain for my adulthood any more than expecting that I would spend my golden years hanging out with Gidget at a malt shop.