With health-care costs climbing, you’ve probably noticed that you’re spending a larger chunk of your income on medical expenses. And older Americans and those with health conditions bear a disproportionate share of the cost burden.
You may find some relief at tax time through medical deductions. But because the rules can be complicated and change from one year to the next, Orly Avitzur, Consumer Reports’ medical director, offers some general information and advice on where to turn for help. Always check with a professional or the Internal Revenue Service to determine how to proceed.
Get the right advice.
More than 60 percent of Americans hire someone to prepare their taxes. For advice on finding the best tax-preparation help for you, see here. The IRS also offers a tax guide for seniors, with information on free tax-prep services.
To itemize or not?
The standard federal tax deduction is $6,300 if you’re single (or married filing separate returns) and $12,600 if you’re married filing jointly. The standard deductions are a bit higher if both spouses are 65 or older. But if you had high medical and dental expenses, you may do better by itemizing.
How to decide? Be aware that you can deduct medical expenses only if you itemize. And for most people, only the expenses that are higher than 10 percent of their adjusted gross income are deductible. (The AGI is your income minus such deductions as alimony and student loans.) But if you’re 65 or older, expenses over 7.5 percent of your AGI are deductible.
Consider some potential deductions you may be unaware of, such as the cost of a weight-loss program if you’re diagnosed as obese by a physician; admission and transportation to a medical conference relating to a chronic disease that you, your spouse or dependents have; personal-care items such as hearing aids and glasses; and the care of a service dog.
Other possible deductions include long-term-care insurance for you and your dependents and, if you’re self-employed, your health-insurance premiums. If you have a physical or mental disability, you may be able to deduct the costs of health services and products you need to be able to work, such as computer-assistive technology.
Even home improvements may qualify. Avitzur’s parents will probably itemize this year because in 2015 they had their first-floor bathroom modified to be handicapped-accessible. Because the improvements — widening doors and installing handrails, wheelchair ramps and a roll-in shower — are considered medically necessary, they can be deducted. For a complete list of health-related deductions, see here.
Consider caregiving costs.
Rules are especially complicated for these deductions, so check the ins and outs carefully with a professional. For example, you may be able to deduct part of what you paid someone to care for a dependent household member. But the care must have been needed so you or your spouse could work or look for work. You’ll find more on this at irs.gov.
Plan for next year.
If you expect big medical expenses ahead, being deliberate about when you spend may help you get to the percentage you need for deducting those costs. Taxpayers can bunch medical deductions into one year to maximize the deductions, says Martin M. Shenkman, an attorney and certified public accountant specializing in tax planning in New York and New Jersey. For example, if you have had a lot of needed — and expensive — medical care in a given year, consider buying an extra pair of prescription glasses if you can use them, stocking up on such products as blood glucose test strips or making sure that you schedule (and pay for) a series of planned dental treatments in the same calendar year.
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For further guidance, go to ConsumerReports.org/Health, where more detailed information, including CR’s ratings of prescription drugs, treatments, hospitals and healthy-living products, is available to subscribers.