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Susan Tompor: Taxes: What you need to know to deduct medical expenses

Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

Some retirees are grumbling that young families are getting a better deal under tax reform. But seniors could be overlooking some good news for deductions for medical expenses.

At one point, the heated debate on tax reform called for eliminating the deduction for medical expenses entirely.

But the major tax reform package that Congress passed in late December kept that deduction and put the threshold for claiming medical expenses at 7.5 percent. The threshold is retroactive for 2017 and can be used this year when filing your returns. The same threshold will apply for 2018 returns, too.

Taxpayers are able deduct medical expenses paid only in the same tax year as the return.

Ending the deduction, of course, would have been devastating for seniors and other families facing serious health challenges. Such a move, for example, would have hurt seniors who were paying for long-term care not covered by Medicare or private insurance, as well as those with sizable out-of-pocket medical expenses.

"Instead of eliminating the deduction, they improved it for the taxpayer," said Gil Charney, director of tax law and policy analysis for The Tax Institute at H&R Block.

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The improvement is the 7.5 percent threshold.

If nothing changed, taxpayers would have been able to claim nonreimbursed medical expenses that exceeded 10 percent of adjusted gross income on the 2017 return -- a tougher hurdle than 7.5 percent.

Tough to qualify

Claiming the deduction still isn't easy for many taxpayers. If you have $20,000 in adjusted gross income, for example, you'd need at least $1,500 in qualifying medical expenses during 2017 to hit the threshold. And only expenses after that amount would qualify for a deduction. So, if you had $2,000 in qualifying expenses in this example, you'd be able to claim $500 in deductions for medical expenses.


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