Let’s face it, medical costs can eat up a large chunk of your money. And they are unpleasant to deal with and a general hassle. So here we are combining the topic of medical costs and taxation – I’m sure this article will be a laugh riot. But regardless, it is wise to take full advantage of any tax deductions that are available for medical costs. And who doesn’t want to save money? (Put your hand down and keep reading)
While the list of available deductions is very long, it may not be a deduction that helps everybody. That is because for a lot of medical deductions, they have to total more than 7.5% of your income before they start contributing to your itemized deductions. In 2013 that is scheduled to go to 10% for those under 65. And THEN your itemized deductions normally need to total more than your standard deduction. So there are some hoops to jump through to get a benefit from those medical bills! Flaming hoops with tigers and lions! Ok maybe not, but there are exceptions to those limits – including for Ohio, which are discussed below. Here are the top 5 items I commonly see people forget to include, or didn’t know they could deduct on their tax returns:
1. Dental and Eye Expenses
When people think medical deductions, they immediately think, doctors, hospitals, prescriptions, and co-pays. They seem to forget that their glasses, contacts, and dental expenses could be deductible as well!
Don't forget dental expenses!
For dental expenses, don’t forget to consider cleaning, fluoride treatments, sealants, x-rays, fillings, braces, dentures, extractions and possibly others. Just because a dentist does it, however, doesn’t mean you can deduct it, so be sure to ask or check if there is a question.
For eye expenses, don’t forget to consider glasses, contact lenses, eye exams, and eye surgery – which can include laser eye surgery as well. There are a lot of things that an eye doctor can do and charge for so be sure to keep everything documented so you can go over it for your taxes.
Bottom line is, when you do your taxes, do a face check. Glasses? Contact lenses? Hearing aids? Dentures? Braces? Teeth? Eyes? There you go.
2. Health Insurance Premiums
OK, on the surface, people don’t normally forget this, because it is sometimes the largest item they pay for, but some people don’t realize it does not have to be subject to that 7.5% or 10% (2013) limitation. If you are self employed and not eligible to participate in a subsidized health plan through an employer of yours or your spouse, it is possible you can deduct all of your health insurance expense on your main 1040 form. The calculation is a little more complicated than that, but that is the basic gist of it. It’s worth planning for if you are eligible because it takes the deduction out of the itemized deductions game and reduces adjusted gross income, which can affect many other things on your tax return.
Ohio: Here again, if you aren’t eligible to participate in a subsidized plan, these medical costs could possibly be directly deducted if it wasn’t on your federal return. In addition, if you have excess medical expenses over the 7.5% amount (or 10% in 2013 for some), these can be factored in, as well as long term care insurance premiums. It is very easy to miss this Ohio deduction, so even if your itemized deductions don’t look so promising for the federal return, don’t ignore them!
3. Medical Miles
Many people miss the tax deduction for medical mileage
People know they can frequently deduct business miles of some sort. People also know they should keep a mileage log for those miles. But when it comes to medical miles, a lot of people completely forget about it. It is very common to have medical mileage, and if you are able to deduct medical expenses, you need to look at this hard. You can deduct expenses for the use of their own vehicle as medical transportation. The mileage rate for January 1 – June 30, 2011 was 19 cents, and it was 23.5 cents from July 1 – December 31, 2011. For 2012 it is set to be 23 cents. That may change as time passes. In addition to miles, don’t forget your parking fees and tolls. All it takes is good record keeping.
4. Chiropractors, Psychiatrists, Psychologists, Acupuncturists, Osteopathic Doctors, Physical Therapists, Podiatrists
Doctors can have different specialties, and that doesn’t mean what they do can’t qualify for a medical deduction to save money on your taxes. While there can be exceptions, it is a good idea to keep track of expenses from these often overlooked fields come tax time.
5. Crutches and Wheelchairs
So you broke your leg getting out of the bathtub and needed to get crutches. Fortunately, you do not have to disclose how you broke your leg. I do, however, recommend sharing it with me because we can all use a laugh during tax season. Now if you’ve ever broken your leg while preparing your taxes, that’s priceless. Regardless, you can deduct the cost of crutches or if necessary a wheelchair. This can be a forgotten item if you are not careful. There are a myriad of other medical devices that are out there so be diligent and keep your records straight so no potential deduction is overlooked at tax time.
If medical expenses are a major item for you, it is a good idea to consider some tax planning. The amount of paperwork when dealing with health issues is astronomical. Also, it can be challenging getting all the information together and even knowing what to get together for tax purposes. It can get complicated because you could have insurance coverage, reimbursements, adjustments, timing issues, and other things coming into play. So it is best to start during the year and not at tax time to keep yourself organized and make sure nothing slips through the cracks! And as always, if you aren’t sure, ask. Everybody has unique situations. Check with a CPA for tax advice relating to your specific situation.
See? It wasn’t that bad. Maybe medical expenses and taxation were meant to go together. Like cottage cheese and ketchup. And you may just have saved taxes and learned something too! Thanks for reading and feel free to share.