Claiming medical tax deductions on your federal income taxes is a great way to minimize your tax liability and maximize your return. Consider these important points when you're doing your tax planning, and consider a tax preparation professional to help you maximize your savings.
Use the correct form to report medical tax deductions on your federal income taxes.
In order to report medical tax deductions, you must use Schedule A with a Form 1040. If you want to claim medical deductions, you cannot use a Form 1040EZ, 1040A or a U.S. Individual Income Tax Return; only a Schedule A attached to a Form 1040. If you use the incorrect form, you won't find a place for medical deductions, and you may be asked by the IRS to file an amended return with the correct form.
Calculate your tax deductions using the Schedule A.
Lines one through four of the Schedule A deal with medical tax deductions. To calculate your medical tax deductions, enter the following information:
Line 1: Line 1 is for how much money you spend on medical expenses. The IRS stipulates that you cannot include reimbursements or payments you receive from insurance companies or any third party, so subtract any of those payments from your total medical expenses before entering them on this line.
Line 2: Line 2 is simply the number from the adjusted gross income slot, Line 38 of the Form 1040. In order to calculate your adjusted gross income, you must have otherwise completed your tax return.
Line 3: On Line 3, calculate 7.5% of your adjusted gross income, using the number from line 2.
Line 4: Line 4 is where you determine your medical tax deductions. If Line 1 is more than Line 3, calculate the difference and enter your deduction on Line 4. If Line 1 is less than Line 3, then you do not have enough qualifying medical expenses to be eligible for the deduction.
If you file medical deductions, keep records.
In the event of an audit, you may be asked to provide records documenting your medical deductions. Keep on file for seven years medical records indicating who had the procedure, how much the procedure cost, the date of the procedure and the provider name and address. If you're claiming transportation costs, document those. Make sure you have original documentation from the provider in the form of a statement or invoice to back up this data.
Consult a tax preparation professional if you need help.
IRS forms can be confusing. If you're not sure about the eligible deductions or just want help completing the forms, consult a tax preparation professional. H&R Block is one of the most popular tax preparation companies, and they can also assist you with tax planning. However, if you don't want to spend the money, you can also use free tax services or a low-income tax clinic to help you prepare your federal return.
Given the enormous costs associated with medical treatment and procedures, knowing how and what you might claim for medical tax deductions can afford you significant savings when it's time to file your federal taxes. By keeping careful records and understanding exactly what you can claim, you should be able to save money as a result of the medical costs you incur.
If you're going to itemize your tax deductions this year, you might want to include medical expenses, but how do you know which ones are qualified? The IRS imposes strict guidelines on claims for medical care, education, charitable donations and everything else under the sun.
Each year, especially around April 15th, millions of Americans begin to gather receipts and documents to support the various federal income tax deductions. Of the tax documents and deductions, claiming medical related expenses is often the most challenging for income tax filers.
There are many tax deductions and credits that are overlooked. New for this year only is the long distance tax credit. Other overlooked deductions include work supplies and expenses, child care costs, medical expenses, and more. The long distance tax credit is a one time only tax credit that is for this tax season only.