IRS medical deduction?

Question

Do we have to forgo the standard deduction in order to deduct medical expenses from our 2006 income taxes (I have the IRS booklet on medical deductions, but it is not clear on that point). I haven't started figuring out my taxes, but I want to know if it will be worthwhile to tally up our medical expenses beforehand. Thanks.

Answer 1

You can either itemize or take the standard deduction. The IRS instructions are quite clear on that!

Medical expenses are subject to a limitation of 7.5% of your adjusted gross income. For example, if your AGI is $20,000, you must have at least $1,500 in medical expenses to take any deduction at all.

If your total itemized deductions do not exceed your standard deduction it makes no sense to itemize.

Answer 2

If you take the standard deduction, you cannot also take medical deductions. There are some exceptions:

1. If you are self-employed and pay your own health insurance, those premiums can be deducted from your self-employment income on Schedule C.

2. If you contribute to a Health Savings account, those contributions are deducted as an adjustment to income.

Other than 1 or 2 above, all medical deductions are taken on Schedule A which is used instead of the standard deduction when the total Schedule A deductions are larger than the standard deduction.

Answer 3

It all depends but your answer is simply probably not, based on the available information in your question it would appear you have a simple tax situation. If you have one or two dependents and no major medical bills then the standard deduction will always exceed your itemized deduction. Itemized deductions are subject to requirements [usually 7.5% of your adjusted gross income] and therefore are hard to meet. Sounds to me like you should not waste your time unless there are major medical bills out there as well as other deductions you are itemizing.