How do I handle this tax situation?

Question

I had to go to the emergency room several months ago. My health insurance covered 80% of my total hospital stay. I owed about $1500.00 when it was all settled. I didn't have that kind of money on hand so I sold $2000.00 worth of stocks to pay for it. I have since spent the last $500.00 on prescriptions. I live in Arizona, single, and no dependents. Is there any way I can write this off? I have never itemized during tax season. Or is this something I just have to swallow?

Answer 1

The only way to deduct medical expenses is to itemize. Even then, you can only write off the amount that is more than 7.5% of your adjusted gross income.

You will have to report the stock sale on schedule D. If you had a net profit, you'll pay tax on that. If you had a net loss, you can deduct up to $3000 loss from your other income for the year. If you had a loss over $3000, you can carry over the rest to the next year.

Answer 2

You need to itemize when you file, and you need to have enough medical expenses for the year to be eligible to "write off" the expense. You will also need to pay capital gains taxes on any gains you had from selling the stock. Spending the other $500 might not have been the smartest move, if you sold at a profit, not all of that money was yours! Some of it belonged to your Uncle Sam...

Answer 3

You will have to report the profit on the sale as income, but you may be able to write off the medical expenses, which would at least offset the income. If you have more than $5,250 in deductions like that, then you should itemize. I'm assuming that since you have investments in stocks, you also have a house. Mortgage interest may potentially be itemized, as well as Federal student loan interest, etc. Call up H&R Block, and ask their advice.

And as far as the taxes on your sale go, that's why you file your taxes: to make sure you're good with the IRS.

Answer 4

call a good accountant