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9 Tips For Tax Saving

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Medical tax deductions may seem daunting, but with these simple tips you can maximize you healthcare deductions and save money.

Use the 7.5% Rule

               If you took a pay cut last year or were unemployed temporarily, your lower income could qualify you for this even if you never qualified in the past.   Taking a closer look at expenses will show if your lower income now meets the 7.5% rule..Use this quick calculation to see what your expenses must be in order to qualify for the rule:

[YOUR GROSS ADJUSTED INCOME] x 0.075

Now Tips 2-10 will tell you what things to look for to help you determine if you meet the 7.5% rule.  If you do spent 7.5% of your income on medical expenses, check to see if it’s more than the standard deductions.  If not, you’re better off just deducting using the standard deduction.

Standard lump sum deductions are:

-Single or filing separately if married:  $5,700

-Head of household with dependents:  $8,400

-Married and filing jointly: $11,400 (Add $1,100 for each spouse 65 or older)

-Self-Employed:  If you’re self-employed, then you can deduct 100% of the premium cost from your income.  The 7.5% rule does not apply to you.

Visitors’ Rights

               Whenever you get a service or treatment, the cost you pay out of pocket for that visit is deductible.  This includes co-pays or what you have paid from your plan’s annual deductible (it’s deductible, get it?).  Look for any of these services in your medical history to include:

-Doctors visits, examinations, treatments

-Dental visits

-Eye exams

-Lab fees

-Surgery

-Hospital care

Medications

               It’s nearly impossible to go through the year without having some medication prescribed to you.  If you have a chronic condition, the cost to fill these can start to stack pretty high.  Take an inventory of your prescriptions either on the explanation of benefits your insurer provides, or by contacting your pharmacy (or multiple, if you filled your meds at more than one company).  What to include:

-Prescriptions

-Birth Control pills

-Insulin

-Over-the-counter drugs that a doctor has prescribed to you (NOT ones you bought without a prescription)

Do NOT include:

-Over-the-counter drugs (such as aspirin or cold medication, even if a doctor recommends it.  A recommendation is not necessarily a prescription  The only exception: insulin)

-Vitamins or supplements

-Any medications you acquired from another country (e.g. Canada or Mexico)

Going the Distance

               Travel to and from the doctor’s office or the hospital for treatment can rack up if you have frequent health treatments…or accident-prone children.  The good news is that you can take 16.5 cents per mile driven for each medical visit.  Didn’t record your mileage at the time? Calculate the miles by using Google maps, then apply this distance for each office visit.  If you took public transportation, include the fare instead.  If there are parking fees, which many hospitals now impose, you can deduct those as well, and don’t forget to include any tolls you paid along the way to or from these visits.  Airfare to another city if seeking medical services, including up to $50 per night for lodging, is also a medical tax deduction.  This does not include days you take for vacation or pleasure on this trip, but nice try.

Your checklist:

-Calculate 16.5 cents per mile (rate for 2010 taxes)

-Parking and tolls

-Airfare/bus fare

-Up to $50 per night lodging for trips required for treatment

Eye of the Beholder

               While visits to your eye doctor may be a more obvious health care tax deduction, many other costs associated with taking care of your eyes are also tax deductible.  If you have a vision problem, or have worn either contacts or glasses, for a while, this is good for you.  Look for the following eye health-related items to deduct:

-Contact Lenses, including maintenance such as saline solution and enzyme cleaner

-Glasses

-Laser eye surgery

-Radial keratotomy

Alternative treatments

               Sometimes traditional medical treatment doesn’t do the trick for specific conditions.  If you are seeking any of these treatments as an alternative or supplement to treat a medical condition, then you may deduct these health related costs.

-Acupuncture for medical reasons

-Chiropractic treatment for medical reasons

-Therapy

-Psychologists, psychoanalysis, and psychiatric care

-Christian Science Practitioner

Some treatments such as going to therapy or to an acupuncturist can also be a grey area.  These can be a medical care expenses only if it is to treat a diagnosed condition, and must be prescribed treatment rather than simply a doctor’s recommendation.  For these situations, it would be best to call the IRS to determine if these qualify.

Medical Equipment

               Some conditions require additional help beyond a doctor or medication, and involve purchasing support equipment.  These, including equipment added to a home or vehicle, are also health care expenses that can be tax deductible.

While this is by no means an exhaustive list, here are just some examples of what is deductible:

-Crutches

-Hearing Aids

-Oxygen

-Blood/glucose monitor

-Artificial Limbs, prosthetics

-Wheelchairs

-Guide dog or other service animal (buying, training and maintaining)

Dental Deductions

               Believe it or not, any time you seek dental treatment, whether you are simply getting a cleaning or undergoing a more advanced dental surgery, you can add these to your tax-deductible expenses list. Things to look for:

-Cleanings

-Treatments

-Artificial teeth (Veneers and dentures can be a grey area, and can often only be included if it necessary to improve a deformity related to disease or treat a condition, and may require a diagnosis.

Baby!  No-baby

               Pay attention, ladies…and men.  Whether you are planning for a pregnancy, or trying to prevent one, the costs associated with your efforts can be a medical tax deduction, including:

-Pregnancy test kits

-Birth control pills

-In-vitro fertilization (including the cost of storage for both egg and sperm)

-Sterilization such as vasectomy or tubal ligation (aka “getting tubes tied”)

-Surgery to reverse sterilization

-Abortion

-Midwife for delivery (If they are a registered nurse, they would be categorized in the medical service category, and if not, they could still fall under nursing services.)

Source : fyiliving.com

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