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Deducting medical expenses

George SaenzDear Tax Talk,
Can I deduct medical and dental bills from last year that I paid this year? -- Jessie

Dear Jessie,
An individual's deductions are based on the year they're paid. Therefore, those medical bills from 2002 are deductible on your tax return only if that is the year that you paid them.

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You could even deduct on your 2002 taxes any medical bills for services to be rendered in 2003 as long as you paid the bills last year. For example, suppose you had some medical bills last year, but not quite enough to meet the 7.5 percent of income threshold the Internal Revenue Service says you must reach to deduct the costs. However, you planned on having some medical procedures done in early 2003. If you had arranged with your doctor to pre-bill you for the 2003 work, you can take advantage of the not-yet-completed medical procedures on your 2002 tax return.

The system is the same for dental expenses. In fact, I encounter this tax situation a lot with dental bills since insurance coverage is minimal in this area and therefore it's easier to get over the deduction threshold.

But if you waited to pay any 2002 doctor bills in 2003, then they are of no use to you on your upcoming tax filing. You'll have to wait until you file in 2004 to use them as a deduction. Remember, it's not when you get the medical treatment; it's when you pay for it.

-- Posted: Jan. 16, 2003




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