Making the Most of Your Tax Return
Let’s face it; putting together your tax return is not something you look forward to. If you’re like most people on a fixed income, you’ve probably gotten into the habit of claiming the standard deduction because you receive a larger standard deduction on your taxes if you’re over 65 and/or blind. Depending on your expenses, mainly medical expenses, you might want to consider itemizing your deductions instead.
For 2016, if you or your spouse is 65 or older, you can deduct medical and dental expenses as long as they total more than 7.5% of your adjusted gross income. If you’re under age 65, these expenses must total more than 10%.
Whether or not you have significant medical expenses, you can read about eligible medical deductions here and consider which method would benefit you more. Several eligible medical expenses are listed below to help you get started:
What You Can Deduct
- If you pay for Medicare Part A, Part B, Medigap, and/or Part D –you’re eligible to deduct your premiums
- As long as you pay your premiums, they are covered. It doesn’t matter whether they’re paid directly from your Social Security benefits or out of pocket. Costs paid by Medicare, employers, or other third parties cannot be deducted
- Premiums for qualified long-term care coverage are covered up to a certain limit
Deductibles, Copayments and Coinsurance
- If your plan has a deductible, the amount you pay out of pocket before the plan pays its share of the cost, it can be counted as a medical deduction
- The same is true for any copays or coinsurance you may pay for your medications
- You can deduct the costs of hearing aids, eyeglasses/contact lenses, and dental treatments
- Any costs you paid for inpatient care at a hospital or other institution, including meals are eligible
- Special equipment is deductible, such as an artificial limb, or a wheelchair
- Travel costs to get you to and from medical care are an eligible expense
Expenses Paid for Relatives
- If you paid health insurance premiums or uninsured medical expenses for a dependent, these are deductible
For many, figuring out your income tax return can be frustrating and confusing, so it may be helpful to contact a tax professional. In fact, a tax professional can work with you to determine whether certain expenses are eligible for deduction, and whether itemizing your deductions will be better for you than claiming the standard deduction. If you find that you didn’t include certain deductions on previous itemized returns, you may be able to get a refund on those tax savings by filing amended tax returns for up to 3 prior years.