Five tips for itemizing health care costs and deductions

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Health care costs are often neglected by those seeking itemized deductions while...

Health care costs are often neglected by those seeking itemized deductions while preparing to file their taxes. Certain procedures, including cosmetic surgery, teeth whitening and health club and gym dues, are not deductible, but many others are. The following are guidelines to help you claim any medical expenses to which you are entitled:

Do your medical costs exceed 10 percent of your gross income?

If your medical costs do not exceed 10 percent of your gross annual income, you are unlikely to benefit by claiming them. For instance, if you earned a gross income of $100,000 in one year and racked up $12,000 in qualifying health care costs, you can deduct $2,000. The Internal Revenue Service (IRS) sets the threshold at 7.5 percent of an individual's adjusted gross income for those who are 65 and older. However, that percentage will increase to 10 percent in 2017.

Do your expenses qualify as deductions?

The IRS permits people to deduct the cost of non-cosmetic surgeries, preventative care, visits to psychiatrists and psychologists, glasses, contacts, dentures, prescription medications and hearing aids. It also allows travel expenses related to medical treatment, including mileage, parking fees and even bus or train fare, to be deducted.

Consider claiming medical expenses as an adjustment to your income

Doing this will lower your adjusted gross income, which makes it appear as if you earned less money. These expenses can include self-employed health insurance premiums. However, unlike property tax and mortgage interest deductions, you are not permitted to write off all your medical bills in one year. Instead, you are allowed to subtract 10 percent of your adjusted gross income from your entire annual medical expenses and deduct the remainder.

Do not claim expenses for which you were reimbursed

If your employer, insurance provider or health savings account reimbursed you for costs related to medical care, you cannot legally claim those costs as deductions.

Did you pay for treatment in a different year?

If you paid for treatment one year and received it the previous year, you can claim the costs for the year in which you paid them. Some taxpayers neglect to deduct such expenses because they associate them with the previous year.

Although you may not be among those legally permitted to deduct medical expenses, it is worth your time to look into it as a possibility before you file your taxes. If you need help determining which medical costs you are eligible to deduct on your taxes, contact an Atlanta financial advisor.


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