Maximize Your Medical Deductions
Beginning this tax year, you can maximize your medical deductions in excess of 10% of your adjusted gross income (AGI), up from the previous 7.5% AGI limitation. The limitation remains at 7.5% for taxpayers age 65 and over through 2016, unless they are subject to the alternative minimum tax, in which case it is 10% for them as well. For joint return filers not subject to the AMT, if either spouse is age 65 or older, the 7.5% of AGI limitation applies to their joint medical expenses.
If you don’t itemize your deductions or are nowhere near exceeding the AGI limitation, you need not concern yourself with this deduction. On the other hand, if you do itemize and think you are close to meeting the AGI limitation, then it may be worth your time to summarize your medical expenses so far for the year and determine if it is advantageous to pay any outstanding medical bills before the end of the year. For example, if you are making payments for dental work, it might be worth it to pay off the balance you owe if you can reasonably afford to do so and if doing so will put you above the new AGI floor.
Use the following checklist to help you accumulate your deductible medical expenses. The list is by no means all-inclusive, and some of the deductions listed may have additional restrictions not included here.
Determining whether the tax benefits, after the AGI limitation is applied, warrant accelerating payment of any additional medical expenses for 2013 can be complicated; you may wish to call us, Bressler & Company, at 559.924.1225 for assistance.
• The medical deduction AGI floor has increased to 10%, up from 7.5%.
• For taxpayers age 65 or older and their joint-filing spouses, the AGI floor remains at 7.5% until 2017.
• For all taxpayers subject to the alternative minimum tax (AMT), the AGI floor is 10%.
• If you itemize your deductions, it may be appropriate to check your year-to-date health care costs and see if it would be beneficial to pay any outstanding medical expenses if you can reasonably afford to do so.