Tax breaks: Bait and switch
Even with health insurance, many people find they personally pay a lot for medical treatments. Thank goodness those out-of-pocket medical costs are tax deductible.
Yes, they are, to a point.
To claim medical expenses, you must itemize instead of taking the standard deduction amount.
And you can’t claim every penny you spend on medical treatments. On 2012 tax returns, the medical expenses deduction is available only for amounts that are greater than 7.5 percent of your adjusted gross income, or AGI. A taxpayer with a $40,000 AGI will need more than $3,000 in medical bills, meaning that total medical costs of $3,100 only will produce a $100 itemized medical deduction.
Under provisions of the Patient Protection and Affordable Care Act, commonly referred to as health care reform, the AGI medical deduction percentage threshold increases to 10 percent in 2013.
The good news here is your medical deductions are not limited to insurance copays and prescription costs. There are many medical costs that can be counted, so if you’re close to your itemized medical threshold, check out all the possibilities that could help you claim this deduction.