Medical Expense Update
In 2017 the Tax Cuts and Jobs Act was passed, with it brought substantial reform to several parts of tax regulation. One area that saw massive change was the temporary elimination or change of many itemized deductions. Part of these changes was the amount that was needed for individuals to take the medical expenses deduction.
Medical deductions have long been a staple deduction for people that suffer from unreimbursed medical bills. Prior to the tax changes, the amount allowed for deduction was any amount over 10% of your annual gross income. This was changed temporarily to 7.5% of your AGI for years 2017 and 2018; however, this was short lived as the deduction has returned to 10% once again in 2019.
The way the deduction works that any amount over 10% of your annual gross income is allowed as the deduction. For instance, if your AGI was $100,000 then any amount over $10,000 would be for the deduction. If you had a $20,000, unreimbursed surgery, then the excess $10,000 over your AGI will be allowed for your deduction. This is extremely important and can help those without health insurance immensely. However, it is important to note that if you have insurance reimbursements or employer reimbursements you will not apply for the deduction.
Taxes can be tricky, but they are a part of everyday life. Knowing what deductions you apply for is key, and to do so it might help to have professionals on your side. If you have questions or need help with taxes, contact the professionals at the Center for Financial, Legal & Tax Planning, Inc.