Tending to Your Taxes
Tax time, whether you live on Park Place or on Baltic Avenue, is always a flurry of paperwork, receipts, and forms. Navigating the paperwork can be a daunting task, but keeping good records and being prepared for your filings can help make tax time less taxing.
For a person living with diabetes, it's important to remember that some medical expenses can be deducted when you file your return. Medical supplies like blood glucose meters, test strips, oral medications, insulin, insulin pumps, and other maintenance supplies can really take a bite out of your budget! Medical expenses, according to the IRS website, are "the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include costs of equipment, supplies, and diagnostic devices needed for these services." Many of your diabetes-related expenses can be deducted on your tax return.
Here are some tips on managing your medical deductions:
What's new for 2012?
There are a few health- and medical-related tax changes you should be aware of as you prepare your taxes:
- Standard mileage rate — In 2012, the standard mileage rate allowed for operating expenses for a car when you use it for medical reasons is 23 cents per mile.
- COBRA Continuation Coverage — You are a qualified beneficiary as a result of an involuntary termination that occurred during the period beginning on September 1, 2008, and ending on May 31, 2010, or had a reduction of hours during that period, which was followed by a termination of your employment that occurred after March 1, 2010, and before June 1, 2010.
- Health Coverage Tax Credit — If you paid the premiums for qualified health insurance coverage, you may be able to claim the health coverage tax credit (HCTC). If you are eligible, you can get monthly HCTC (advance payments), a yearly HCTC, or a combination of these methods. The HCTC is 72.5% of the payments made 2012.
- Health Flexible Spending Arrangements (FSAs) — Since March Jan. 1, 2011, coverage and reimbursement for an over-the-counter medicine is no longer applicable without a prescription.
- Health Coverage for Older Children — Since March 30, 2010, health coverage for an employee's children under the age of 27 is now generally tax-free to the employee.
What can you include?
COBRA continuation health coverage and Medicare A, B, and D are no longer deductible. Following is a list of some of the items that are deductible:
- Annual Physical Examination
- Artificial limb
- Artificial teeth
- Birth control pills
- Dental treatment
- Diagnostic devices (i.e. blood sugar test kit)
- Eye surgery
- Insurance premiums you pay for policies that cover medical care
- Laboratory fees
- Long term care services
- Nursing services
- Operations (excluding cosmetic procedures)
- Weight loss programs (if weight loss is necessary to treat a diagnosed condition)
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As I mentioned in an earlier post, one of the benefits that made it cost-effective for me to go with the real healthcare (HSA) plan rather than the phony (HRA) plan is that my company is now covering "preventative" medicines at $0 copay. The formulary for these, as stated by CVS/Caremark (my pharmacy benefits provider), covers all test strips, lancets, and control solutions. I dutifully get my doctor to write up prescriptions for all of my testing needs, submit...