Consumer Tips
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.” 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?
There are a few health- and medical-related tax changes you should be aware of as you prepare your 2008 taxes:
- Archer Medical Savings Accounts (MSAs) - For 2008 and 2009, the minimum annual deductible, maximum annual deductible, and the maximum out-of-pocket expenses limit have increased.
- Health Savings Accounts (HSAs) - The minimum/maximum annual deductible, out-of-pocket expenses,and maximum contribution amounts have increased for 2008 and 2009.
- Long-Term Care Premiums - For 2008 and 2009, the maximum amount of qualified long-term care premiums includible as medical expenses has increased.
- Health Flexible Spending Arrangements (FSAs) - A special rule allows amounts in a health FSA to be distributed to reservists ordered or called to active duty.
The following are some medical expenses that are deductible:
- Artificial limb
- Birth control pills
- COBRA continuation health coverage
- Eye surgery
- Laboratory fees
- Medical services (i.e. doctor’s visits, insurance premiums paid for accident and health or qualified long-term care insurance)
- Medicines
- Nursing services
- Operations (excluding cosmetic procedures)
- Transplants
- Weight loss programs (if weight loss is necessary to treat a diagnosed condition)
- Wheelchair
- Baby-sitting services for healthy baby
- Controlled substances
- Cosmetic surgery
- Flexible spending account (FSA)
- Health club dues
- Insurance premiums
- Nonprescription drugs and medicines
- Nutritional supplements
- Weight loss programs (to improve appearance, general health, or sense of well-being)
How much can you deduct?
You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income (found on Form 1040, line 38).
For example, if your adjusted gross income is $40,000, 7.5% of that amount would be $3,000. If you paid medical expenses of only $2,500, you cannot deduct any medical because your amount paid does not exceed 7.5% of your gross adjusted income. On the other hand, if you paid in medical expenses of $4,300, you can only deduct $1,300.
Who can you include? You can include medical expenses you paid for yourself, your spouse, or any dependents.
How do you treat reimbursements? You can only include in medical expenses those amounts paid during the tax year for which you received no insurance or other reimbursement. For insurance reimbursements, you must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. This includes all payments from Medicare.
1 - Internal Revenue Service. Publication 502, Medical and Dental Expenses. (Accessed 07/08).
Adapted and excerpted from the Internal Revenue Service website at www.irs.gov
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