Tax Tip of the Month

August, 2018

Consider the following unexpected medical deductions

It may be easier to qualify for a medical deduction in 2018 than before, with the assumption you will be itemizing deductions. Moreover, the threshold for deducting unreimbursed medical and dental expenses has been lowered to 7.5 percent of adjusted gross income (AGI). That means only the excess amount above the threshold is deductible.

At the same time, other tax law changes increasing the standard deduction and reducing the tax benefits of itemized deductions might complicate your tax situation. As a result, a sizable medical deduction could tilt the scales in favor of itemizing.

Tip: Look beyond typical medical deductions

Unquestionably, it would be wise to bunch your medical expenses in 2018 when it suits your needs. Keep in mind you do not have to only count on typical costs for doctor visits and prescription drugs.

Deductions for a wide variety of less common expenses have been approved by the IRS or the courts in the past, including amounts paid for the following:

  • Acupuncture
  • Alcoholism treatment
  • Artificial teeth
  • Birth control pills
  • Breast pumps and supplies
  • Chiropractors
  • Guide dogs and other service animals
  • Hearing aids
  • Lead-based paint removal
  • Medical care for transplant donors
  • Oxygen and oxygen equipment
  • Pregnancy tests
  • Psychiatric care
  • Smoking-cessation programs
  • Special diet foods prescribed by physician
  • Telephone equipment for the disabled
  • Vasectomies
  • Wigs for mental health purposes (e.g., to compensate for loss of hair due to an illness or medical treatment)

Note that these costs may be material or immaterial. For instance, deductions have been allowed for installing a swimming pool to alleviate the taxpayer's asthma as well as clarinet lessons to correct a child's overbite.

Remember that the medical deduction threshold reverts to 10 percent-of-AGI in 2019. If you expect to clear the 7.5-percent mark in 2018 and will still be itemizing, move nonemergency expenses like medical exams and dental cleanings into this year. Otherwise, defer elective expenses to 2019, when you will have better probability of getting the deduction.

Should you have any questions or would like more guidance on qualified medical expenses, give us a call so we can better understand your personalized needs and make a plan tailored for you to save money on your taxes.


Please do not hesitate to contact us at 559-226-2209 if you have any questions or concerns about preparing your 2017 tax return. In addition, if you would like to schedule an appointment, either call us or email us at roland@rooscpa.com. Alternatively, you can schedule an appointment by submitting an online form through our website at www.rooscpa.com/contact-us/

Hope you find this helpful and we look forward to serving you.

 

Any financial or tax information contained in this article is taken from a general view and should not be acted upon in your specific circumstances without further details and analysis of the situation or professional assistance from a CPA or tax return preparer.

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You will love working with him, he truly cares about you and your family and he is a top-notch tax planner. If you are looking to work with the very best, you will love working together with Roland!”
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