The new tax law has changed many things about our lives, and medical deductions is one of them. The new law’s final version kept the itemized deduction for medical expenses, and it lowered the adjusted gross income (AGI) limitation from 10% to 7.5% for 2017 and 2018.
Here is where it gets a little complicated. Because medical deductions are itemized, to get any benefit from them, your itemized deductions must exceed the standard deduction. For 2018, the standard deduction is $24,000 for a married couple filing jointly (or for a surviving spouse with a dependent child), $18,000 for a head of household, and $12,000 for anyone else.
Keeping the medical deduction is necessary for the families of disabled individuals and for senior citizens who require extraordinary care. Without this deduction, said groups could face massive medical costs without any tax relief on the horizon. It is important to note that this deduction is not just applicable to disabled individuals, senior citizens, and their families. With how unpredictable medical bills can be, you never know what will happen in the future.
We have two ways to aid the process of this change:
- Bunching deductions: This is done by paying as much of your medical expenses possible in a single year so that the total will be more than the AGI floor, making it possible for your overall itemized deductions to exceed the standard deduction.
- Being aware of medical deductions: Just being aware of what is actually deductible and what is not will help you exponentially. Under certain circumstances, you may even be able to deduct the medical expenses that you pay for others. A few deductible costs that you might not know about are:
- Adoptive children’s pre-adoption medical costs
- Unreimbursed costs from doctors, dentists, hospitals and medical insurance premiums
- Prescriptions for birth control pills
- Chiropractors
- Christian Science practitioners
- Decedent’s medical costs
- Adult diapers
- Drug-addiction rehabilitation costs
- Egg-donation expenses
- Elderly devices
- Medical equipment and supplies
- Fertility enhancements
- Guide dogs
- Household nursing services
- Impairment-related home modifications
- In vitro fertilization costs
- Lactation aids
- Lead-based paint removal
- Learning-disability tuition expenses
- Medical-related legal fees
- Meals from inpatient care
- Medical-conference expenses
- Medicare premiums
- Nonhospital institution costs
- Nursing-home expenses
- Organ-donation costs
- Smoking-cessation programs
- Sterilization expenses
- Weight-loss programs (limited)
Some of the foregoing have special requirements. To have GML CPA help you with the process, feel free to visit our website, and book an appointment with us!
