Q. My wife had medical bills for surgery in December. We haven’t been reimbursed yet by the insurance company. Can we deduct the cost as a medical expense on our 2007 return? C.M., Spokane, WA
A. Maybe. Here’s the catch: You can deduct qualified medical expenses for the year only to the extent they exceed 7.5% of your AGI. This amount must be reduced by any insurance reimbursements. Because you weren’t reimbursed for the surgery in 2007, you can deduct the amount that exceeds the 7.5% threshold. The kicker: Then you will have to report the reimbursements as taxable income in 2008.
Tip: The 2008 reimbursements are taxable only up to the amount that you deduct as medical expenses in 2007.
- Small Business Tax Deduction Strategies No matches