Tax day is approaching quickly, so you may be searching for the correct ways to trim your IRS bill or increase your tax refund. Be sure not to overlook medical and dental expenses.
For expenses incurred in 2013, you can deduct expenses that exceed 10 percent of your adjusted gross income if you were born after January 2, 1949.
According to the IRS, expenses associated with the “diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body” may be eligible for deduction.
But how do you know which expenses are fair game – and which cannot be deducted? What about the Health Coverage Tax Credit? Here are some answers to four of the most common questions:
The following are examples of expenses that you can deduct:
The following are examples of expenses that you cannot deduct:
If you are self-employed, you may be able to deduct health insurance costs as an adjustment to your income. These costs include insurance payments for yourself, a spouse and children under the age of 27. However, you cannot deduct insurance costs for any month in which you were eligible to participate in an insurance plan subsidized by your spouse’s employer. To determine your deduction amount, use the Health Insurance Deduction Worksheet in the Form 1040 instructions.
According to the IRS, HCTC covers 72.5 percent of qualified health insurance premiums for eligible individuals and their families. This credit is available on a monthly basis to cover premiums, or it may be taken on a yearly basis when filing an income tax return. HCTC covers displaced workers, individuals receiving benefits from the Pension Benefit Guaranty Corporation (PBGC) that are 55 years old or older, and individuals who have lost health insurance coverage at work. COBRA continuation coverage, coverage under a non-group (individual) health plan, and certain state health insurance plans may qualify.
Proper life insurance can also help protect you and your family, including your finances, when an unpredictable health issue/expense arises. For more information on deducting medical expenses, consult IRS publication 502 available at IRS.gov, or talk to your tax preparer.