Why bother tracking your medical expenses? Tax rules say you can start deducting unreimbursed medical expenses only after they exceed 7.5 percent of your adjusted gross income (AGI). So if your AGI is $100,000 this year, you'd need to fork over $7,500 of your own cash before you can deduct one single nickel.
Strategy: Don't give up so fast. If you're like most people, you're paying an ever-escalating portion to your company health and dental plans. When you add in other costs, such as co-payments and deductibles, you could be near the 7.5 percent threshold this year.
Example: Say you contribute $250 every other week for family coverage. Plus, you kick in another $50 each biweekly paycheck for dental coverage. Without considering any other expenses, you're paying a whopping $7,800 in deductible insurance costs this year ($300 x 26 paychecks). If your AGI is $100,000, you're already over the 7.5 percent limit!
Tip: Scour your checkbooks and credit card statements for other deductible medical expenses. Once you pass the 7.5 percent mark, everything else is deductible gravy. Bonus: You may also be able to use those expenses to reduce your state income tax bill.
- Small Business Tax Deduction Strategies No matches