NORMAN — How do you know whether or not your medical and dental expenses can be deducted from your 2012 taxes? There are many considerations, and then it boils down to a simple formula: compute your adjusted gross income and multiply that by 7.5 percent. Subtract this amount from your medical expenses, and what’s left is what is deductible.
Start this process by figuring out which of this year’s medical and dental expenses will qualify as deductions in Uncle Sam’s eyes. After reducing the expense by the amount paid by insurance, you can claim expenses incurred for diagnosis, cure, treatment and prevention of disease or for purposes affecting the function and structure of the body. Commonly overlooked expenses include: wheel chairs, glasses, dentures, bandages, fertility enhancement, pregnancy test kits, birth control pills, health insurance premiums including Medicare Parts B & D and certain types of long-term care insurance policies, stop smoking programs (if recommended by a doctor) and weight loss programs prescribed by a doctor to treat conditions such as obesity or hypertension.
Keep in mind that the costs of medical service must be claimed in the year paid, not necessarily the year received. If you are paying with a credit card, IRS considers the medical treatment paid for, regardless of how long it takes you to pay it off. Before you run up those credit cards, however, the tax advantages should be weighed against the cost of the interest.
Here’s the catch: you must have enough other itemizations (i.e., home mortgage interest, real estate taxes, charitable contributions, etc.) to beat the standard deduction. Therefore, you may technically have enough medical expenses, but if you don’t have enough “itemizations” on Schedule A to beat the standard deduction, you won’t benefit by deducting the expenses. The standard deduction for married couples filing a joint return for 2012 is $11,900; for single individuals and married couples filing separate returns, it’s $5,950; and for heads of household, the standard deduction is $8,700.