With another tax season behind us, it’s not a bad idea to think about how you’re going to handle medical expenses on next year’s returns. The federal tax law has a 7.5% threshold for medical expenses for taxes filed in 2018 and 2019 (for 2017 and 2018 tax years). This means that you can deduct medical expenses that are higher than 7.5% of your adjusted gross income (AGI). For example, if your income is $30,000—7.5% of your income is $2,250. If your medical expenses add up to $4,000, you can then claim $1,750 ($4,000 – $2,250) on your tax return for medical expenses.
Keep in mind that it will only make sense to itemize your deductions if the total of the deductions is more than what you’d get by filing with the “standard” deduction. Taking the standard deduction is much easier so if there is only a slight difference between the two totals, the standard would be the way to go.
Starting with the 2019 tax year, the standard deduction is going to go way up, almost double what it is now. If you’ve spent a large amount on medical bills over the last year, this would be a good time to look at the numbers. This deduction is particularly important to Medicare beneficiaries who spend on average $5,680 each year on health expenses that Medicare does not cover, says the AARP.
For a complete list of medical expenses you can deduct, go to www.IRS.gov/forms and see IRS Publication 502. Here is a short list of some expenses that are included aside from the typical such as physician, dental and X-rays:
- Inpatient hospital care or residential nursing home care
- Acupuncture or inpatient alcohol or drug addiction centers
- Weight-loss program for a specific disease
- Insulin and drugs that require a prescription
- Admission and transportation to a medical conference relating to a chronic disease that you, your spouse or dependents have if necessary for medical care
- False teeth, reading or prescription glasses, hearing aids, crutches, wheelchairs
- A guide dog or other service animal to assist a visually impaired or hearing impaired person
- Electricity costs for using an oxygen concentrator (you will need a formula for this calculation)
There are many more deductions available and you will need to check for specifics, but this should at least get you thinking whether itemizing might be for you. Good luck!
Ref: The Pulmonary Paper, January/February 2018 Vol. 29, No.1
The COPD Store www.IRS.gov www.aarp.org