Even for someone who carries health insurance, the cost of medical care can be an incredibly formidable one these days. Between doctor co-pays, expensive surgeries, and regular medications, most families find themselves paying more for healthcare over time – especially as their primary members get older.
But there’s some good news: medical expenses can be tax deductable. However, this possible deduction comes with a catch; before you can deduct one cent from your taxes, your total health expenses for the year need to exceed 7.5% of your gross income. This means that a person who earns $60,000 gross would need to incur at least $4,500 in medical costs before any tax savings can be realized. The IRS instituted this rule to insure that wealthy Americans would get deductions, but the high cut-off mark makes it difficult for many people to write off their medical care.
Fortunately, there are legal ways to inflate your healthcare expenses so as to hit the cut-off and get the deduction. Here are a few main tips for doing just that:
-Include core and peripheral costs. Almost every cost associated with medical care can be included in the total figure. This includes core expenses like surgeries, treatments, and doctor’s visits, but it also covers more peripheral costs such as gas spent to travel to a hospital, drug treatments, insurance plans, and items that a doctor suggested you purchase. In fact, there are few healthcare related costs that are not included. Foremost among these are certain health-related donations, such as a donation to a blood bank.
-Don’t forget dependents. Your total heath costs don’t simply compromise those expenses that were incurred in your name. Rather, they include any money you spent on healthcare for any person – you, your spouse, your children, your parents, etc. Don’t forget to include these costs if applicable.
-Rotate years. Medical expenses are usually unique in that they often cannot be anticipated or planned. But, if you have the ability to do so, concentrating your major medical expenses in rotating years can help you hit the cut-off 50% of the time.
These are just a few tips to keep in mind when trying to get a tax deduction for your medical costs. While the 7.5% cut-off may seem high, this does not mean that it’s insurmountable – especially when every single cost is taken into account.