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Due to recent changes in tax laws, a lot of Americans are understandably concerned about how the new regulations will impact their filing process. And with a growing number of residents complaining that their tax refunds were significantly lower (or non-existent) this year, it’s no wonder that more people are looking for a bit of a break. Deductions are possible, even in cases of steep medical expenses — but you have to play by the rules.
The Tax Cuts and Jobs Act of 2017 enacted a number of changes, including brand new tax brackets. One of the most important shifts outlined in this act is the way itemized deductions are performed. In fact, most deductions were actually eliminated as a result. However, the medical expense deduction option still remains (along with a select few others), and it’s possible that you could take advantage of it this year. As long as you itemize those expenses, rather than taking the standard deduction, you may be able to write off a number of medical costs.
That said, you’ll first need to determine whether itemizing makes sense for you. In other words, you’ll need to calculate whether the combination of all your applicable deductions would be more than the amount outlined in the standard deduction. The dollar amount of the standard deduction nearly doubled over the past year, meaning that the average single taxpayer under the age of 65 has a standard deduction amount of $12,000. Unless your itemized deductions would exceed that amount, it’s probably not going to make financial sense for you to go this route. And if you have determined that itemization is the right way to go, the only qualifying medical expenses that would apply for an itemized deduction are those that represent costs greater than 7.5% of your 2018 adjusted gross income.
Experts are saying that they’re seeing more single taxpayers being able to take advantage of the medical expense deduction, as the $12,000 threshold is easier to get over once you factor in mortgage payment deductions and other qualifying deductions. Still, you’ll need to familiarize yourself with what kinds of medical expenses will actually apply for a deduction. According to CNBC, co-pays, co-insurance, and medical equipment like hearing aids and wheelchairs can all be written off, as can dental work and even health care-related travel expenses. Long-term care premiums may apply as well, depending on the state. In-patient hospital care fees also count towards these deductions, which may be welcome news for the 3% of patients who go to urgent care centers and later need to be diverted to emergency departments throughout the United States; hospital bills can represent extravagant costs for which most Americans don’t have the financial cushion. Nursing home fees, acupuncture costs, in-patient addiction treatment, therapy sessions, orthodonture work, some weight loss program fees, costs of eye glasses and contacts, prescription medications, and service animal costs can also be written off as deductions.
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Of course, there are some medical expenses that you’ll be stuck with. Although plastic surgery and cosmetic procedures are on the rise, the majority of these procedures won’t qualify for a deduction. Even if you’re getting Botox for some other reason than vanity, you won’t be able to write it off — so when the results start to dissipate after three to six months, you might have to re-evaluate your expenses. Most gym memberships and non-prescription drugs won’t count, either. Costs that were reimbursed by your insurance provider aren’t eligible for a deduction for obvious reasons. You should consult with your tax professional to identify whether there are costs you might be able to write off or ones you cannot include.
Under the right circumstances, itemizing these deductions could save you some money this year. That said, you’ll need to be very careful when taking advantage of this opportunity. To ensure your tax return is filed correctly, you may want to hire a professional. And since Tax Day is fast approaching, you’ll probably want to get everything in order rather quickly.