Posts tagged as:

medical and dental expenses

Ask the Taxgirl: Health Insurance Premiums

March 22, 2008 · 6 comments

Taxpayer asks:
Last year, I lost my job. I haven’t found a full time job yet so I have been paying for my health insurance out of pocket by COBRA.

Is this deductible on my taxes? A friend told me that it was but I thought only visits to the doctor and prescriptions were.

Thanks for any help you can give me. It’s a tough time and any money that I can save is good.

Taxgirl says:

I’m sorry to hear about your job situation! I know there are a lot of folks in similar boats these days. Hopefully, the economy will turn around sooner rather than later…

As to your question, absolutely yes! Health insurance premiums which are not reimbursed by an employer are definitely deductible, provided that you otherwise qualify (meaning that you itemize your deductions on a Schedule A).

It’s important to note that the expenses are only deductible to the extent that they exceed 7.5% of your adjusted gross income. So, for example, if your AGI was $40,000, you can only deduct expenses which exceed $3,000 (7.5% of $40,000). Of course, when it comes to health insurance premiums, you’re likely to hit that number more often than not.

And please don’t think that only visits to the doctor and prescriptions are deductible! There are a host of medical and dental expenses that you can deduct. Check out this list of deductible medical and dental expenses – I’m sure that you’ll find some that you can use!

Good luck!

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

Have a question? Ask the taxgirl!

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Medical and Dental Expenses from A-Z

February 29, 2008 · 10 comments

You know that you can deduct the cost of visits to the doctor and dentist, right? And that you can deduct the cost of parking and transportation to and from those visits?

What else is deductible? Check out this handy list:

1, Abortion
2, Acupuncture
3, Alcoholism treatment
4, Ambulance service
5, Artificial Limb
6, Artificial Teeth
7, Bandages
8, Breast Reconstruction Surgery (following a mastectomy for cancer)
9, Birth Control Pills
10, Braille Books and Magazines
11, Capital Expenses for home improvements and modifications if their main purpose is medical care.
12, Car modifications for persons with a disability.
13, Chiropractor
14, Christian Science Practitioner (whew, good for Tom Cruise, Katie Holmes and Suri, no?)
15, Contact Lenses
16, Crutches (buy or rent)
17, Dental Treatment (X-rays, fillings, braces, extractions and dentures but not teeth whitening)
18, Diagnostic Devices (such as glucometers)
19, Drug Addiction Treatment (so, Lindsay Lohan gets a break)
20, Drugs – the prescription kind
21, Eyeglasses
22, Eye Examinations
23, Eye Surgery
24, Fertility Enhancement (including in vitro fertilization)
25, Guide Dog or Other Animal for persons with disabilities
26, Health Maintenance Organization (HMO) payments
27, Hearing Aids (including batteries)
28, Home Health Care
29, Hospital Services
30, Insurance Premiums
31, Laboratory Fees
32, Lead-Based Paint Removal from your home (scraping is okay, repainting is not deductible)
33, Legal Fees (only for authorization of treatment for mental illness)
34, Lifetime Care—Advance Payments
35, Lodging for medical care
36, Long-Term Care premiums
37, Qualified Long-Term Care Services
38, Qualified Long-Term Care Insurance Contracts (note that there are limits)
39, Medical Conferences primarily for and necessary for medical care
40, Medical Information Plan
41, Medicines (prescribed only – except for insulin which need not be prescribed)
42, Nursing Home (medical care – not for lodging or personal care)
43, Nursing Services
44, Operations if medically necessary (elective cosmetic surgery is not deductible – poor Joan Rivers)
45, Optometrist
46, Organ Donations and Transplants
47, Osteopath
48, Oxygen
49, Psychiatric Care
50, Psychoanalysis
51, Psychologist
52, Special Education for children with disabilities
53, Stop-Smoking Programs (does not include nicotine gum or patches)
54, Surgery
55, Telephone equipment for hearing impaired (includes TTY and TDD equipment)
56, Television equipment for hearing impaired
57, Therapy
58, Transportation (includes bus, taxi, train, or plane fares or ambulance service for patients, parents and nurses)
59, Trips (if the trip is primarily for, and essential to, receiving medical services)
60, Vasectomy
61, Vision Correction Surgery
62, Weight-Loss Program (only for a specific disease diagnosed by a physician)
63, Wheelchair
64, Wig (upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease)
65, X-ray

So what’s NOT deductible?

1, Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby
2, Controlled Substances (no tax deduction for buying pot)
3, Cosmetic Surgery which is elective
4, Dancing Lessons, even if for improving health (so sorry, Marie Osmond)
5, Diapers or Diaper Service
6, Electrolysis or Hair Removal
7, Funeral Expenses
8, Hair Transplant
9, Health Club Dues
10, Household Help, even if recommended by a doctor
11, Illegal Operations and Treatments
12, Insurance Premiums
13, Maternity Clothes
14, Medicines and Drugs From Other Countries (including Canada and Mexico)
15, Nonprescription Drugs and Medicines
16, Nutritional Supplements such as vitamins unless they are recommended by a medical professional for a specific medical condition
17, Personal Use Items such as toothpaste and tampons
18, Swimming Lessons, even if for improving health
19, Teeth Whitening
20, Weight-Loss Program unless it is a treatment for a specific disease diagnosed by a physician (Valerie Bertinelli and Kirstie Alley are both out of luck)

You should keep records to substantiate your claims. And remember, this is just a check list. The expenses listed may be subject to phase outs, eligibility requirements and other limitations. If you’re not sure whether these expenses apply to you, ask your tax professional!

(Source: IRS Pub 502)

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9 Child-Related Tax Breaks That You May Be Overlooking

February 28, 2008 · 2 comments

In recent weeks, I’ve received a flurry of emails from parents asking about whether band uniforms, soccer cleats and other expenses related to children are deductible. I thought it might be useful to have a checklist of some child-related deductions that you may be overlooking.

1, Child tax credit. If your modified AGI (adjusted gross income) is $75,000 or less for a single person or head of household ($110,000 for married taxpayers) and you have a qualifying child, you may be eligible for the child tax credit of up to $1000.

2, Child care expenses. If you paid qualifying child care expenses, you may be entitled to a tax credit for those expenses. For more details about what constitutes qualifying child care expenses, see my prior post.

3, Hope credit for college expenses. You may be eligible for a tax credit for your dependents who are college students in their first two years of college, provided that you are responsible for paying those expenses. The credit is up to $1,650 on the first $2,200 of college tuition and fees and is available for students engaged in study at least half-time.

4, Lifetime Learning Credit. You may be eligible for a tax credit of up to $2,000 on the first $10,000 of college tuition and fees for your dependents, provided that you are responsible for paying those expenses. This credit is available for students who take at least one course; the students need not be engaged in study at least half-time.

5, Tuition and Fees Deduction. Expenses for tuition, registration fees, and other required fees for your dependents who attend eligible educational institution (for example, most colleges, universities and vocational schools) may qualify for the Tuition and Fees Deduction. The deduction is limited to $4,000 per year. Your modified AGI must be less than $80,000 for a single taxpayer or head of household and $160,000 for married taxpayers.

6, Adoption Credit. If you have out of pocket expenses relating to adopting a child, you may be eligible for a credit of up to $11,650 per eligible child. Out of pocket expenses include adoption fees, legal fees, court fees and travel expenses; you are not eligible to deduct expenses that are reimbursed to you from any organization.

7, Medical and Dental Expenses. If you paid medical or dental expenses for your dependents, you may be able to take a deduction for the expenses that exceed 7.5% of your AGI.

8, Investment Fees and Expenses. To the extent that you pay investment fees, custodial fees, trust administration fees, and other expenses for managing investments that produce taxable income that is reported on your income tax return, those expenses are deductible. This includes fees related to income reported on your income tax return for investments in the names of your dependents.

9, Charitable Donations. While tuition payments for private and parochial schools are not usually deductible, donations of goods and cash may be. In fact, most schools (private, public and parochial) have 501(c)(3) status – if you’re not sure, just ask. If you make a donation of cash and goods that would otherwise qualify for a deduction, and you do not receive a benefit in return, the value of that donation is tax deductible.

Of course, this is just a short list and the expenses and credits listed may be subject to phase outs, eligibility requirements and other limitations. If you’re not sure whether these expenses or credits apply to you, ask your tax professional!

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