medical deduction - Linkenheimer LLP CPAs & Advisors

Medical Expense Deduction Threshold Temporarily Reduced

A deduction is allowed for the expenses paid during the tax year for the medical care of the taxpayer, the taxpayer’s spouse, and the taxpayer’s dependents to the extent the expenses exceed a threshold amount.

To be deductible, the expenses may not be reimbursed by insurance or otherwise. If the medical expenses are reimbursed, then they must be reduced by the reimbursement before the threshold is applied. Under pre-Act law, the threshold was generally 10% of AGI.

RIA observation: For tax years beginning after Dec. 31, 2012, and ending before Jan. 1, 2017, a 7.5%-of-AGI floor for medical expenses applied if a taxpayer or the taxpayer’s spouse had reached age 65 before the close of the tax year.

And, under pre-Act law, for alternative minimum tax (AMT) purposes, the medical expenses deduction rules were modified such that medical expenses were only deductible to the extent they exceeded 10% of AGI.

New law. For tax years beginning after Dec. 31, 2016 and ending before Jan. 1, 2019, the threshold on medical expense deductions is reduced to 7.5% for all taxpayers. (Code Sec. 213(f), as amended by Act Sec. 11027(a)) In addition, the rule limiting the medical expense deduction for AMT purposes to 10% of […]

By Linkenheimer LLP|2020-09-03T20:04:46+00:00January 11th, 2018|deduction, deductions, expensing, medical deduction, New Tax Laws|0 Comments

Claiming a Tax Deduction for Medical and Dental Expenses

Your medical expenses may save you money at tax time, but a few key rules apply. Here are some tax tips to help you determine if you can claim a tax deduction:

You must itemize. You can only claim your medical expenses that you paid for in 2014 if you itemize deductions on your federal tax return. If you take the standard deduction, you can’t claim these expenses.
AGI threshold. You include all the qualified medical costs that you paid for during the year. However, you can only deduct the amount that is more than 10 percent of your adjusted gross income.
Temporary threshold for age 65. If you or your spouse is age 65 or older, the AGI threshold is 7.5 percent of your AGI. This exception applies through Dec. 31, 2016.
Costs to include. You can include most medical and dental costs that you paid for yourself, your spouse and your dependents. Exceptions and special rules apply. Costs reimbursed by insurance or other sources do not qualify for a deduction.
Expenses that qualify. You can include the costs of diagnosing, treating, easing or preventing disease. The […]

By Linkenheimer LLP|2020-09-03T20:05:30+00:00March 11th, 2015|deduction, medical deduction|0 Comments

Deducting Self-Employed Medical Insurance for S Shareholders

According to the IRS, a 2-percent shareholder in an S corporation may be eligible for a deduction against Adjusted Gross income (AGI) for the cost of accident and health insurance premiums paid by the corporation. The deduction is equal to 100 percent of the amount paid for medical insurance for the shareholder, his or her spouse, and dependents and is reported as an adjustment to income on the shareholder’s Form 1040.

The deduction has two limitations:

The deduction is not available for the calendar months in which the 2-percent shareholder or spouse is eligible to participate in another employer-subsidized health insurance plan; and,
The deduction cannot exceed the taxpayer’s earned income derived from the trade or business that provides the health insurance plan. S corporation shareholders treat their social security wages from the S corporation as earning income for purposes of this limitation.

A 2-percent shareholder that meets the requirements is eligible for the deduction if the plan providing the medical care coverage is established by the S corporation, which means that:

The S corporation pays the premiums for the accident and health insurance policy covering the 2-percent shareholder (and his or her spouse and dependents, if applicable) in […]

By Linkenheimer LLP|2020-09-03T20:05:34+00:00January 14th, 2015|deduction, medical deduction, self employed|0 Comments