With the ever-increasing cost of health insurance and medical care, Americans are looking for chances to claim as many health care-related tax breaks as possible. However, an increased itemized medical deduction threshold taking effect this year will make that more difficult, according to a recent Weaver e-newsletter article.
Here’s what you need to know about the change.
- Before 2013, you could claim an itemized deduction for medical expenses paid for you, your spouse and your dependents to the extent that those expenses exceeded 7.5 percent of your adjusted gross income (AGI).
- Due to the 2010 health care legislation, a higher threshold of 10 percent of your AGI will now apply to most taxpayers.
- If either you or your spouse will be 65 or older as of December 31, 2013, the new 10 percent-of-AGI threshold will not affect you until 2017. Until then, the 7.5 percent threshold will still apply.
- Your AGI is the number at the bottom of Page 1 on your Form 1040. It includes all of your taxable income items and can be reduced by certain write-offs, such as moving expenses, deductible IRA contributions, alimony payments and student loan interest.
To learn more about the change and to read tips on managing your medical expense deductions, click here to read the full e-newsletter article.