I have not been able to find an answer to this problem so hopefully there's some tax gurus here that can help me out.
Here's the situation, these numbers are not accurate but should give an idea of the problem. Say I make 60k a year. The IRS says that medical expenses have to be at least 7% (?) of your income before they can be deducted. That would be $4200. I have payroll deduction for my medical insurance of $3000.00. That money is taken out pre-tax so that can't be used as a deduction. However I have $3000.00 of medical bills throughout the years. That is below the $4200.00 the IRS would allow for a deduction so I can't deduct it. However if I didn't have the medical insurance taken out of my paycheck pre-tax, that would give a total medical bills of $6000.00 and all of that would be deductable. I've spoken with my HR dept and they can't take the insurance out post tax. Is there anyway to deduct these additional medical expenses? Hopefully I explained this correctly.
2007-11-08 02:11:08 · 6 answers · asked by smf_hi 4 in Business & Finance ➔ Taxes ➔ United States
If you could have your insurance taken out post-tax you'd still end up losing money by doing that. Yes, you could deduct some of your expenses if you are itemizing. Using your sample numbers, you could deduct only the $6000 MINUS the $4200 floor, so you'd get a deduction for $1800, but pay income tax on the insurance premiums - so you'd pay tax on an extra $1200! The 7% has to be subtracted from your expenses in any case before you can deduct the rest. The $6000 wouldn't ALL be deductible, just the amount over the floor to deduct.
Actually it's 7.5%, so on $60K would be $4500, but it works the same, just would cost you even MORE - you'd get a $1500 medical decuction and pay tax on an extra $3000.
2007-11-08 06:05:43 · answer #1 · answered by Judy 7 · 3⤊ 1⤋
1) It's 7.5% of income before medical expenses are deductible
2) Using your above example, all of your medical wouldn't be deductible anyway. Only the portion that is over 7.5% of your income is deductible. $6000 - $4500 ($60k x 7.5%) = $1500. And that $1500 is only deductible if you itemize.
In the past 7 years, I have had a grand total of 2 clients that could deduct medical expenses. That 7.5% hurdle is just too high for most people.
2007-11-08 10:21:39 · answer #2 · answered by Wayne Z 7 · 5⤊ 0⤋
Actually it's 7.5% of AGI, and you only get to deduct that portion that exceeds 7.5% of income.
The top of Schedule A is the only place you take the deduction and there's no getting around the 7.5%.
Unless you're self employed, then the insurance premiums can be taken as an adjustment to income on page 1 of the 1040.
2007-11-08 10:18:53 · answer #3 · answered by nealeinmi 3 · 3⤊ 0⤋
Your assessment of the situation is accurate! You're stuck and you can't deduct them. Sorry! You could potentially ask your firm for a raise large enough to handle most of your medical premiums and go purchase your own plan, but that's a REAL stretch!!!!! Also you sort of mention that these bills were accumulated over some long period of time! If it didn't happen this year, you can carry them over either! Be careful and Stay healthy!
2007-11-08 10:23:25 · answer #4 · answered by da_zoo_keeper 5 · 1⤊ 6⤋
You already are getting a full deduction of the insurance premiums, if taken out pre-tax.
2007-11-08 16:23:53 · answer #5 · answered by r_kav 4 · 1⤊ 6⤋
H&R Block may be able to give you free advise.
mb
2007-11-08 10:19:15 · answer #6 · answered by Anonymous · 1⤊ 10⤋