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KristineS
11-23-2009, 03:20 PM
Some of you already know that the last few years have been rough for me healthwise. They've also been rough on my wallet. I've had a lot of out of pocket medical expenses, some of which I'm still paying off.

I know that you can deduct a certain portion of medical expenses from your taxes, but what I'm really interested in knowing is what sort of records I need to have. If I have the receipts from what I paid out of pocket and the statements from my health insurance company as to what they did not pay, is that enough?

I'm hoping one of our resident finance gurus can give me some guidance on this.

phanio
11-23-2009, 04:13 PM
I am not an accountant adn i think you should spend some tiem with one to ensure you are getting all the write-offs you can.

But, it only really matters if you get audited and the IRS really does not audit medical expenses.

I think it really only matters what you can prove - if you can prove that you paid medical expenses and those expenses are deductible - then you should be ok. Reciepts to medical provider and hospitals and invoices from them should be just fine.

Evan
11-23-2009, 06:25 PM
But, it only really matters if you get audited and the IRS really does not audit medical expenses.

They will if they think it's excessive. That doesn't mean they aren't legitimate.

Evan
11-23-2009, 06:50 PM
Some of you already know that the last few years have been rough for me healthwise. They've also been rough on my wallet. I've had a lot of out of pocket medical expenses, some of which I'm still paying off.

I know that you can deduct a certain portion of medical expenses from your taxes, but what I'm really interested in knowing is what sort of records I need to have. If I have the receipts from what I paid out of pocket and the statements from my health insurance company as to what they did not pay, is that enough?

I'm hoping one of our resident finance gurus can give me some guidance on this.

Kristine,

To claim medical expenses on your tax return, you need to itemize your deductions. You are only allowed the amount that exceeds 7.5% of your adjusted gross income. For example, if your AGI was $50,000, 7.5% is $3,750. So if you had $5,000 in medical expenses, only $1,250 would be allowed.

Expenses allowed include:


Insurance premiums for health and dental care.
Prescription medicines.
Insulin.
Doctor's care.
Medical tests.
Nursing.
Hospital care, including meals and lodging.
Clinic and lab fees.
Programs to stop smoking and alleviate nicotine withdrawals.
Weight-loss programs for a diagnosed disease.
Medical treatment for alcohol or drug addiction.
Medical aids. For example, prescription eyeglasses, contact lenses, hearing aids, braces, crutches, and any costs used to maintain them.
Surgery to improve vision.
Lodging expenses while away from home to receive medical treatment, up to $50 per person.
Ambulance services.
Mileage @ 24 cents per mile. <-- this is probably the most overlooked by preparers.

What I recommend clients do is to go to your pharmacy at the beginning of the year to get a print out of all your prescriptions for the past year. Some companies allow you to do the print out online (e.g. CVS).

Doctors offices should be able to mail you an annual statement with what services were rendered and what you paid for the year. Check with your doctor's office. They may not be the most tech-savvy, and you may need to keep track of the receipts you give them. Alternatively, canceled checks (including the images you often get) would suffice.

Do you preparer a favor and don't cut out the mini check images you get. We have a few clients that do that, and I usually laugh for about 15 minutes before I can even continue. (I try my hardest to resist laughing in front of them.) Plus those things are often such a poor quality, where they can't be read very well.

If you set up an Excel spreadsheet, you can easily track where you went throughout the year based on copay's/deductibles. With a little use from Google, you can figure your mileage to/from your house to the medical facility, and multiply it by 24 cents.

KristineS
11-24-2009, 09:37 AM
Thanks for the advice. I appreciate it. I probably will find someone local when tax time comes around, but I like to be as prepared as possible.

Evan, do people really cut out the mini check images? That seems right up there with keeping your receipts in a shoebox.

Evan
11-24-2009, 11:46 PM
Yes, some people out the mini check images. Hah. It's quite funny actually...