Many people over 65 don’t realize that after 2016, the medical deductions they have been claiming on their tax return are going to take a hit. Currently, medical deductions for anyone age 65 and older are limited to 7.5% of your adjusted gross income (AGI). In 2017, the limit is going to get bumped up to 10% of your AGI. As a result, many seniors are going to feel the pinch in the way of increased taxes.
If your medical expenses are routinely above the AGI limit, you may want to think strategically about your tax situation. Anytime you are faced with a potential increase in taxes, the best defense is a good offense so here are a couple of steps you can take to maximize the medical deductions you are entitled to:
Be sure to pay any unpaid medical or dental bills before the end of the year.
Determine if there any medical expenses you can safely accelerate to 2016 that would otherwise occur in 2017. Here are some examples:
- Eyeglasses, contacts, etc. that can be purchased in 2016 for future use
- Dental work, sinus surgery, Lasik eye surgery, hip replacement surgery, etc. that can safely be pushed into 2016
- Other non-routine doctor visits or equipment purchases such as sleep apnea testing and CPAP machines that have been on your “to do” list.
Make sure you are claiming all of your legitimate qualified medical deductions. Here are some common items to think about:
- doctor/dentist copays or bills
- eyeglasses and contacts (including solution and cleaner)
- diagnostic tests for cancer, diabetes, etc.
- prescription drugs or equipment
- transportation expenses for medical care
- corrective surgeries
- home or vehicle modifications for disabilities
- medical aid providers or helpers
*Note – this is not an all-inclusive list. If you have any questions related to a specific medical expense, please call us at (205) 871-1880 and we can help you determine the deductibility of the expense.
Please keep in mind- if you think your medical deductions for 2016 are not going to be above the 7.5% limit of your AGI, you might be better off doing the reverse strategy of what is mentioned above, and instead find ways you can safely push medical deductions into 2017 to have a better chance of reaping a benefit.