Medical bill and tax deduction?

Question

I was in a car accident and the medical bill costs $6,000. It was not my fault. My car was total wreck. Do I pay all the medical expenses and claim a tax deduction ? I am a student and don't have any job. I don't have any health insurance and the school does not have student health insurance. I talked to an attorney and the attorney said I will ultimately be responsible to pay for all the medical expenses on my own.

Can I ask for a reduced medical expense from the hospital and get a tax deduction on the following year when I find a job ?

I live in southern California.

Thanks for your help

Answer 1

Good advice from the other answers, but I don't understand why you were not required to get health insurance.

Get yourself some health insurance now so this will not happen to you again.

Was there any auto insurance involved, either yours or another drivers, that will cover your medical costs? Most auto insurance policies have that coverage. Ask your insurance carrier, or the insurance of the owners of the cars involved, if there is any coverage for your expenses.

As far as the taxes, if you don't have a job, the medical expenses are not going to give you a tax benefit, since you do not owe taxes. If you pay expenses next year when you have taxable income, it is possible that you could deduct the medical expenses and get some tax benefit, but it will not be significant because of the restrictions explained in a previous answer.

Answer 2

Medical expenses are potentially deductible in the year that the are paid. However there are 2 considerations here. First off, you have to itemized deductions to get any beneift for the deduction. Second, medical expenses are subject to a 7.5% AGI requirement, meaning that only the expenses that exceed 7.5% of your Adjusted Gross Income can be deducted.

Itemizing is only worthwhile if you have more itemized deductions that the standard deduction for your filing status. For a single individual the standard deduction is $5,350 for 2007, so you'd have to have deductions greater than that to get any benefit.

So, if your income was $20,000 per year, the 7.5% AGI limitation would be $1,500. If you had $6,000 in medical expenses you could only deduct $4,500. That's less than the standard deduction amount so unless you had at least another $850 in itemized deductions such as charitable donations, home mortgage interest, ad-valorem property taxes, state income taxes (or sales taxes, your choice) etc. then it would not be worthwhile to itemize and you'd get no tax beneift from the expenses.

In your situation, you'll probably get the most benefit from negotiating a settlement with the hospital. The amounts billed by hospitals bear little resemblance to reality. Most care is covered by insurance and I've seen insurance reimbursements to hospitals as low as 30% of the amount billed. 50% - 60% is VERY typical. They should not expect to collect any more from you than they would from an insurance company and virtually all hospital business offices will negotiate the final bill with you. An uninsured family member was hit with a $3,200 bill for a broken leg a couple of years ago. At my suggestion, he negotiated the final bill down to $775, the amount that Medicare would have paid for the treatment. I'm not saying that you'll get that much of a discount, but it's damn sure worth asking for!

Answer 3

If the accident was someone else's fault, their insurance should cover your medical expenses. And if they were uninsured, your insurance should cover some of the bill.

You can claim medical expenses only if you itemize. You can only claim the amount that's over 7.5% of your income - and then you'd only itemize if your total itemized deductions is over your standard deduction of $5350. You can only claim the amount that you actually paid out of pocket in that year. So if for example $4000 of the bills don't get paid until 2008, that amount (less the 7.5% of your income) would be an itemized deduction for your 2008 filing (in early 2009) if you itemize.

You can certainly talk to the hospital - they might or might not agree to reducing the bill, but it doesn't hurt to try.

Answer 4

Above aswerers are correct!

Now, what I want to know is if you are a student...how do you support yourself? In other words.. I'd try to get over to your local social services and see if you can qualify for ANY help there! Also, when you registered for school, you mean your school doesn't have student ins.? Is it a college? I sure had to pay at my local community college! I'm north of Sta. Barbara.
Say, I hope you had your car insured? I'm not too sure you can claim on your taxes... find that out with at phone call... single? Do singles get to make itemized deductions? Maybe you don't qualify for that?

Best wishes and get better soon my friend!

Answer 5

You should talk with the hospital's business office to see what can be arranged. Whether or not the accident was your fault is not part of the issue here. It's your own finances that have to be addressed. You are responsible for the medical bills if you don't have any insurance; but see what you can work out with the hospital. In CA hospitals which get federal funds are required to take a certain amount of "charity" cases. Your case might qualify.

Answer 6

since the accident was not your fault--sue the other persons insurance co