Last Minute Tax Review: Have You Taken All the Deductions On Your Healthcare?

If you’ve put off doing your taxes this long, well, you don’t any time to waste, so we’re going to make this short and sweet:  Have you taken all the deductions you can on your healthcare expenses?  Here’s the super-quick review of some commonly-overlooked deductions:

Medical Expenses. You can deduct the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income.  It sounds like a lot, but don’t forget that includes everyone on your tax return, medically necessary expenses, travel expenses to treatment, etc.

Long-Term Care Insurance.  Your long-term care insurance for yourself, your spouse and your parents may be deductible.  Check with your tax preparer.

Health Insurance Premiums for the Self-Employed.  If you are self-employed, don’t forget that you are entitled to take your health insurance premiums as an “above the line” tax deduction.  From personal experience, we can tell you that being able to deduct your health insurance premiums against those killer self-employment are a huge advantage!

The Small Business Health Insurance Tax Credit.  Under healthcare reform, a small business may claim a federal tax credit worth up to 35 percent of what the business spends on health insurance for its employees. To qualify for the tax credits under healthcare reform, a small business must have fewer than 25 full-time employees, have average annual wages of $50,000 or less, and cover at least 50 percent of the cost of healthcare for its employees.

Also, a reminder on health insurance and domestic partners.  Under federal tax law, if your employer provides health insurance benefits to your opposite-sex spouse or dependents, the IRS allows you to exclude those benefits from your taxable income. However, if your employer provides those same health insurance benefits to your domestic partner, you must include the fair market value of those benefits as “imputed income” in your taxable income.

Are your tax returns signed, sealed and delivered?  Tell us about it in our discussion forum!

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