Tax season is well underway, and most of us are trying to locate any potential deductions that might save us money. If you take care to track your medical expenses diligently, you could save money in two important ways.
First, all of your out-of-pocket, unreimbursed medical expenses can be utilized as a tax deduction if they exceed 7.5 percent of your adjusted gross income. “Unreimbursed” means that the expense was not covered by your healthcare plan, and the plan did not pay you back for the expense. You can deduct medical expenses related to the following:
- Dental visits and treatments
- Vision care appointments and corrective lenses (contact lenses or glasses)
- Hearing screenings and hearing aids
- Presciption medications
- Your portion of the expense for all medical appointments, treatments, and surgeries
- Purchases of insulin along with any other diabetic supplies
- Travel expenses when you must travel to obtain care
Deductions reduce your taxable income for the year, rather than directly reimbursing you (as a credit would). Still, deductions can be valuable if you spend a considerable amount on your medical care. Make sure to attach Schedule A to your IRS Form 1040 in order to itemize your deductions, and keep proof (like receipts or credit card statements) in case you are ever audited.
In the course of gathering proof of your medical expenses and filing your taxes, you might notice that it’s quite a lot of work! That’s why you should set up some sort of filing system for receipts or card statements now. If you track your spending throughout the year, everything will be handy in a convenient folder next year at tax time.
And tracking your medical spending can help in one more very important way. During Open Enrollment for healthcare plans, you will have a very clear idea of how well your plan is serving you. If you feel that your out-of-pocket spending is too high, we can help you compare other health insurance or Medicare plans so that you can make a switch that benefits you. Give us a call if you have questions about your coverage and out-of-pocket spending limits, and we’ll be happy to help.