Well, it is that time of year. We are all getting interest statements, payroll statements, and tax forms galore. It’s confusing enough, but for those of us with chronic diseases and higher-than-average medical expenses, it becomes complicated at best. It is always a good idea to consult with a tax professional, so that is exactly what I did to help you understand a few things about filing taxes in 2013.
The first thing to understand is that medical expenses are deductable under certain circumstances, and this may also vary with tax laws state to state. There are certain thresholds that you have to reach before your health expenses can be deducted from your taxable income. In general, you need expenses that are over 7.5 percent of your income. This figure will be going up to 10 percent next year. So for an example, if you make $50,000 per year, your medical expenses should exceed $3,750 before you can start deducting them because that is 7.5 percent of your gross income. For next year, the expenses will need to exceed $5,000. This figure varies depending on filing jointly, single, etc. — as every situation is a bit different — and state laws vary.
What Can I Deduct?
If a tax program or accountant advises you that your medical expenses can be deducted, there are a few key things to keep in mind:
You’ll need all those medical bills and receipts you’ve saved over the year.
You can also potentially deduct health-related travel. This includes trips to and from a doctor, including mileage, tolls, and parking. Keep a log of miles driven and then your accountant or adviser will give you the rate (about 14 cents per mile driven). If you didn’t log the miles, you can use a GPS or Google Maps to calculate the distance between your home or office and your doctor’s office. You can add up the mileage from there.
Remember to count the chiropractor, pharmacy, and physical therapist as part of your healthcare expenses. Dental care is extremely important to everyone; especially those people with diabetes, and these expenses can be part of medical deductions.
If you attend a conference, such as a local ADA conference to gain medical knowledge, the cost of the conference is deductible, but NOT the lodging and transportation to get there. I know many people love the Diabetes Conferences to check up on all the newest technologies and treatments.
You need to itemize your tax forms to take advantage of healthcare deductions. You will have high medical expenses generally if you are self-employed and pay a high premium for healthcare or if you have a health plan with a high deductible. If you do not itemize for any reason, you may have cost-saving deductions if you are legally blind or over the age of 65.
Finally, keeping accurate records are of paramount importance when dealing with taxes. I know that I am not that organized with my bills, but I keep everything in a folder for a set year to make the search for something a bit easier. The best advice comes from your own tax advisor, this is only meant as a guide.
Stay well, and happy April 15!