Let’s talk about medical deductions because depending on your health coverage, it can be an important part of your yearly taxes. The first thing to understand is that you are able to deduct health expenses, but only so long as they are not reimbursed. This bars any deductions for coverage by health insurance or an employer, but if they’re covering the cost it won’t be hurting your pockets anyway.
The second part to understand is that the TCJA has changed the threshold for the deduction. For years 2017 and 2018 the minimum threshold for medical expenses has been lowered to 7.5% of the taxpayer’s annual gross income. Therefore, if your expenses do not exceed the threshold, you will be unable to file for the deduction. If your expenses do exceed the threshold then there is more you need to understand.
The next part to know is that if you plan on filing for the medical deduction, it requires the taxpayer to itemize their deductions. This creates an issue for taxpayers because it will only be worth itemizing your deductions if your deductions combined are higher than the standard deduction which is temporarily raised.
In all, injuries happen and no one can prevent accidents. If you or someone you know is wondering about whether they qualify or should use the medical deduction, contact us at the Center for Financial, Legal & Tax, Inc.