New tax deductions for health care costs
Seniors who list various deductions on their income tax returns are getting a little-known break. It deals with health costs.
For 2013 taxes, the claim for health related costs was jacked up from 7.5 percent to 10 percent of Adjusted Gross Income — except for taxpayers or their spouses who are 65 or older. For us seniors the deduction remains at 7.5 percent from 2013 to 2017.
If your health-care expenses this year are anywhere near those of the typical senior, they would be about $10,600 each for you and your spouse. In 2010, health expenses averaged $8,400, according to a report by the Urban Institute. And they have risen by about 6 percent a year since then, the report said.
A senior who smokes or is obese is likely to run up even higher health costs. An operation during the year, say for a broken arm or a knee replacement would drive your medical expenses up still higher — creating a larger tax deduction.
Medical care expenses include the insurance premiums you paid for policies or for a qualified long-term care policy for yourself, spouse or dependents. You can take this deduction for any dependent, if the dependent qualifies under the terms of IRS Publication 502.
You can take only the medical expenses you paid during the year. Your total deductible medical expenses for the year must be reduced by any reimbursement of deductible medical expenses.
There are deduction limits on long-term care policies. For age 51 to 60, the limit is $1,360. For ages 61 to 70, the deduction limit is $3,640. For ages over 70, the limit is $4,550.
IRS publications may be downloaded from the IRS website, http://www.irs.gov, or ordered by calling 800-829-3676.
You list your tax deduction on Form 1040. So, if you have medical expenses (including dental expenses) greater than 7.5 percent of your Gross Adjusted Income, you can deduct these costs.
The IRS says medical expenses may include:
• Payments to doctors, dentists, surgeons, psychiatrists, chiropractors, psychologists and nontraditional medical practitioners.
• Payments for in-patient hospital care or nursing home services, including the cost of meals and lodging charged by a nursing home.
• Payments to take part in a weight loss program to take care of a specific disease, including obesity diagnosed by a physician, “but not ordinarily payments for food items or payment of health club dues.”
• Payments for acupuncture treatments or inpatient treatment at a center for alcohol or drug addiction, for participation in a smoking cessation program, and for drugs that alleviate a nicotine withdrawal that require a prescription.
• Payments for insulin and for drugs that require a prescription.
• Payment for admission and transportation to a medical conference relating to chronic disease you or your spouse or dependents have “if the payments are essential to necessitated medical care. However, you “may not deduct the cost of meals or lodging while attending the medical conference,” according to IRS.
• Payments for false teeth, reading or prescription eyeglasses or contact lenses, hearing aids, crutches, wheelchairs, and for guide dogs for the blind or deaf.
• Payments for transportation primarily for and essential to medical care that qualify as medical expenses, such as the “actual fare for a taxi, bus, train, or ambulance or for medical transportation by personal care, the amount of your actual out-of-pocket expenses, such as for gas and oil, or the amount of the standard mileage rate for medical expenses, plus the cost of tolls and parking fees.”