If you incurred large out-of-pocket medical or dental expenses in 2015, you may be able to deduct them on your taxes. Here are 5 things you should know:
1. What expenses are eligible?
Eligible medical and dental expenses include but are not limited to out-of-pocket costs incurred for preventative care, treatment, surgeries, dental care, vision care, prescription medications and appliances such as glasses, false teeth and hearing aids. These expenses can be for yourself, your spouse or your dependents.
2. What expenses are not eligible?
In-eligible expenses include but are not limited to any medical or dental expenses for which you were reimbursed by your insurance, employer, health savings or flex spending accounts. Additionally, cosmetic procedures are generally not allowed. You also cannot deduct non-prescription drugs or general health expenses such as toothpaste or health club dues.
3. Why can’t I deduct expenses where I used my Health Savings or Flex Spending Accounts?
Health savings or flex spending accounts that are used to pay for medical or dental expenses are usually tax-free. Therefore you can’t deduct these expenses and receive a double tax benefit.
4. How much can I deduct?
According to the IRS website, you can deduct qualifying medical and dental expenses paid during the tax year that exceed 10% of your Adjusted Gross Income (AGI). Your AGI is your taxable income minus any adjustments to your income such as deductions, contributions to an IRA and student loan interest. An example would be if your AGI was $50,000 and you had out-of-pocket medical/dental expenses of $6,250. The amount you would be able to deduct would be $1,250 ($6,250 minus $5,000). If you or your spouse are 65 and older, there is a temporary exemption that allows you to deduct expenses exceeding 7.5% of AGI.
5. What is the next step?
If you determine that your deductions are greater than the standard deductions allowed for tax payers, then you will need to itemize those expenses on a Schedule A form (IRS Form 1040).
While the above information is intended to be a helpful guideline it should not be considered official tax advice. Please contact your tax professional or the Internal Revenue Service directly to ensure you are complying with all of the tax rules in regard to deducting your medical and dental expenses.
Source: willowcreekdds.com Blog