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Tuesday Tax Tips •
2/1/11 |
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Medical and Dental Expenses
Medical and Dental Expenses Many of my clients
ask about deducting medical expenses. As you go out this evening to
shovel snow you may want to think about possible deductions if you
throw your back out. If you itemize your deductions on Form 1040,
Schedule A, you may be able to deduct expenses you paid in 2010 for
medical care – including dental – for yourself, your spouse, and
your dependents. Here are six things you should know about medical
and dental expenses and other benefits.
1. You may deduct
only the amount by which your total medical care expenses for the
year exceed 7.5 percent of your adjusted gross income. This can be a
high hurdle if you are a high income earner.
2. You can only
include the medical expenses you paid during the year. Your total
medical expenses for the year must be reduced by any reimbursement.
It makes no difference if you receive the reimbursement or if it is
paid directly to the doctor or hospital.
3. You may include
qualified medical expenses you pay for yourself, your spouse, and
your dependents, including a person you claim as a dependent under a
multiple support agreement. If either parent claims a child as a
dependent under the rules for divorced or separated parents, each
parent may deduct the medical expenses he or she actually pays for
the child. You can also deduct medical expenses you paid for someone
who would have qualified as your dependent except that the person
didn't meet the gross income or joint return test.
4. A
deduction is allowed only for expenses primarily paid for the
prevention or alleviation of a physical or mental defect or illness.
Medical care expenses include payments for the diagnosis, cure,
mitigation, treatment, or prevention of disease, or treatment
affecting any structure or function of the body. The cost of drugs
is deductible only for drugs that require a prescription except for
insulin.
5. You may deduct transportation costs primarily
for and essential to medical care that qualify as medical expenses.
The actual fare for a taxi, bus, train, or ambulance may be
deducted. If you use your car for medical transportation, you can
deduct actual out-of-pocket expenses such as gas and oil, or you can
deduct the standard mileage rate for medical expenses. With either
method you may include tolls and parking fees.
6.
Distributions from Health Savings Accounts and withdrawals from
Flexible Spending Arrangements may be tax free if you pay qualified
medical expenses.
If you have a large medical expenditure on
the horizon it may benefit you to meet with me to do some tax
planning in an effort to garner some tax benefit out of the medical
expense. Hopefully you stay healthy and this will never be the case.
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McCormick Braun Friman, LLC, website, operating
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