It’s getting more difficult to claim medical tax deductions. That’s because you can only claim those tax deductions once they exceed 10% of your adjusted gross income. Last year the threshold was 7.5%. As you can see, the government is tightening the reigns. As a result, you’ve got to do your best to maximize every opportunity you can to do smart tax planning. Here are three of the most overlooked medical tax deductions to help you do just that.
1. Medical Transportation
You don’t have to take a trip in an ambulance in order to claim transportation costs as a medical deduction. Just as long as your voyage is related to a medical need, you can deduct it. That’s right. Planes, trains and automobiles are all fair game (including cab rides). On top of that, you can tally up medical transportation costs for yourself and your children too if they need medical TLC. And if you use a car, those costs include parking costs, tolls and mileage.
2. Health Insurance Premiums
You may be able to use premiums you pay for health insurance towards that 10% threshold. And long-term health care premiums are deductible too – but there are limits and restrictions.
First, keep in mind that there are different types of long-term care insurance policies. The IRS only allows you to deduct your long-term care insurance premiums if the policy you have is “qualified”. How do you know if you have a qualified policy or not? Simple. Call the insurance broker who sold you the policy or call the company directly and they’ll tell you. Most policies sold these days qualify so you probably won’t have a problem.
Having said that, it’s important to understand that there are limits. If you are younger than 40, you can only deduct $350 a year (2012). If you are over 70, you can use up to $4370 of your long-term care premiums towards that 10% AGI cap. Taxpayers often forget that these deductions are allowable per person. That means if you and your spouse have policies, you can include both premiums. And if you have Medicare, don’t forget that you can include the premiums you pay for Part B and Part D. These are both available so don’t overlook them please.
3. Medical Weight Loss
If a doctor treats a medical condition that you have (such as obesity, hypertension or heart disease) and tells you to slim down, you can include the costs associated with your weight loss program. That includes the costs to join a gym, weight loss support groups etc.
4. For Your Eyes Only
You can deduct the cost of eye exams, glasses and contact lenses. Don’t overlook this (get it?).
5. Home Improvements
If you have a health condition that requires you to make improvements on your home, those costs are includable as well…..kinda. Here’s how that works.
Say you have to have a ramp installed outside your home to give you wheelchair access. Let’s say the retrofit cost a total of $20,000. In order to include a portion of that expense, you must get your home appraised both before and after you have the work done. Let’s say your house was worth $210,000 before the improvement was made and $215,000 after the work was complete. So even though you spent $20,000 for the improvements, the home value only went up by $5,000. The difference ($15,000) is what you can use as a medical deduction.
Remember that you can use these and other medical deductions if you or your dependent the beneficiary of these expenditures. You can also stake a claim for these expenses if they were spent on someone for whom you provide more than half their support.
Have you been taking advantage of all the medical deductions available*?