Deduct medical expenses from taxes?
Many Americans are on the verge of filing their taxes trying to beat the April 18 deadline this year. We answer your tax questions.
CHARLOTTE, NC — It’s March 1 and that means many Americans are on the verge of filing their taxes trying to beat the April 18 deadline this year.
Thanks to the pandemic, many people have had higher medical expenses than last year.
Can you deduct medical expenses from your federal taxes?
Yes, you can deduct medical expenses, but only if the amount of your total medical expenses exceeds 7.5% of your adjusted gross income and only if you choose to itemize.
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WHAT WE FOUND:
“For most Americans, it’s not something you typically see,” Steber said.
Steber tells us that most people won’t deduct their medical expenses because you have to have big medical bills to make it worthwhile. According to the IRS, you can only deduct the amount of your total medical expenses that exceeds 7.5% of your adjusted gross income. You can determine this number by filling out a form known as “Annex A” form 1040.
“So basically you take your income with a few modifications, multiply it by 7.5%, and you can deduct amounts over that,” Steber said.
The IRS says these deductible medical expenses can include the cost of diagnosis, cure, treatment, disease prevention, and more. To qualify for the deduction, Steber told us, it would take a large sum of money, usually for a catastrophic medical condition. However, some seniors may qualify.
“It may also apply to people like seniors when they have low income, they may be retired and have higher medical costs,” Steber said.
Here is the tricky part. You can only claim a medical deduction if you itemize. For most people, the standard deduction will result in a lower tax payment or a higher refund. You can calculate your return both ways, then see which gives you the most bang for your buck.
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