End-of-year tax planning Tip No. 1: Have you been putting off going to the doctor or dentist, or having surgery? This is the year to get the most out of those unwanted procedures.
In 2012, the baseline for medical expenses deduction is 7.5 percent of the adjusted gross income. This means that, before you can deduct medical expenses, the total must exceed 7.5 percent of the adjusted gross income. For example, if the adjusted gross income on the tax return is $20,000, the amount of medical expenses must be more than $1,500 to get any deduction for these expenses. Any expenses more than $1,500 can be deducted on Schedule A of the tax return.
If you wait until 2013 and beyond, the deduction limit increases to 10 percent of the adjusted gross income.
Medical care expenses include payments for the diagnosis, cure, mitigation, treatment or prevention of disease, or payments of treatments affecting any structure or function of the body, according to IRS Publication 502.
In addition, medical insurance premiums that cover medical care or for a qualified long-term-care insurance policy covering qualified long-term care services are also deductible.
Medical care payments can include doctor visits; dental work; eyeglasses and eye exams; therapy; psychiatrists and psychologists; pharmaceuticals, including insulin and prescription drugs; and chiropractors, as well as other nontraditional medical practitioners.
Payments may also include acupuncture treatments, as well as inpatient treatments at centers for alcohol or drug addiction.
Want to quit smoking? Participation in a smoking-cessation program and drugs to alleviate nicotine withdrawal that require a prescription are also deductible.
Weight-loss programs for a specific disease, which includes obesity diagnosed by a physician, are deductible.
Expenses for false teeth, hearing aids, crutches, wheelchairs and guide dogs for the blind or deaf can also be deducted.
Payments for admission and transportation to a medical conference that relates to a chronic disease that you, your spouse or your dependent has are deductible. However, lodging and food while attending the conference are not.
More than 100 allowable medical expense deductions are listed in the IRS Publication 502, which is available on the IRS website as a downloadable PDF file.
People with special needs such as prosthetics or accessibility modifications to the home can find more information in Publication 502.
Pub 502 also lists what isn’t deductible, including: cosmetic surgery (unless to correct a disfigurement); funeral and burial expenses; over-the-counter medicines; toothpaste; toiletries; and nicotine gum and patches used without a prescription.
With the increase to 10 percent coming in 2013, reviewing the IRS Publication 502 would be beneficial.
Expenses can only be deducted in the year that the expense occurs. Payments charged to a credit card can be deducted the year charged and not when paid.
For more information, visit www.irs.gov and type Publication 502 in the search engine.
Tracy Bunner is an enrolled agent and tax preparer with an office in Harrisville. She can be reached at 801-686-1995 or firstname.lastname@example.org.