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Break through medical deduction barrier

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Do you think it was difficult to qualify for medical expense deductions in the past? It’s harder than ever due to new rules taking effect on 2013 returns.

Strategy: Leave no stone unturned to find deductible expenses. If you take the time to conduct a thorough search of your records, you may be pleasantly surprised.

At least medical expense deductions aren’t reduced for higher-income taxpayers under the Pease rule.

Here’s the whole story: Beginning with your 2013 return, medical expenses are generally deductible only to the extent the annual total exceeds 10% of your adjusted gross income (AGI). Previously, the limit was 7.5% of AGI.

For example, if you have an annual $100,000 AGI and $9,500 of unreimbursed medical expenses in 2013, you can’t deduct any expenses. The total doesn’t exceed 10% of your AGI, or $10,000. Before this year, you could have deducted $2,000 in medical expenses [$9,500 – (7.5% of $100,000)].

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