Taxes From A To Z (2018): O Is For Organ Donation

It’s my annual “Taxes from A to Z” series! If you’re wondering whether you can claim home office expenses or whether to deduct a capital loss, you won’t want to miss a single letter.

O is for Organ Donation

As of August 2017, more than 116,000 men, women, and children were on the national transplant waiting list. Every ten minutes another person is added to the waiting list. Still, twenty people die each day waiting for a transplant.

In the United States, we don’t allow folks to buy and sell organs. That means that when you donate your organs, they have no real value for purposes of the charitable deduction on your federal income tax return. However, expenses associated with being a living organ donor are deductible on a Schedule A as a medical expense. It’s easy to find since it’s at the very top of the schedule.

Medical expenses are subject to a floor which means that you can only deduct those expenses for medical care which exceed 10% of adjusted gross income (AGI). Here’s a quick example. Let’s say that your AGI is $50,000. That means that you can deduct expenses which exceed $5,000 (10% of $50,000). If your total medical expenses are $2,000 for the year, that means that you could not deduct any expenses ($2,000 less $5,000 is not more than $0). If, however, your total medical expenses are $6,000 for the year, you could deduct $1,000 ($6,000 less $5,000 = $1,000).

If you seem to remember that the 7.5% floor had increased as a result of Obamacare, you’re right. The floor was increased to 10% beginning in 2015 (taxpayers age 65 and older could use the 7.5% floor through 2016). Beginning in the tax year 2017, the 10% threshold was supposed to apply to everyone, including those over 65. However, as part of tax reform, the floor was briefly bumped to 7.5% for the 2017 and 2018 tax years. It remains 10% for the years 2018 through 2025.

For your taxes from A to Z, here’s the rest of the series: