Use High Health Care Expenses to Lower Your Tax Bill

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Use High Health Care Expenses to Lower Your Tax Bill

If you have high health care expenses, but a modest income, it may be to your advantage to itemize on income taxes, even if you have not done so in the past. When itemized deductions exceed your standard deduction, itemizing reduces your tax bill. Seniors 65 and over can claim a standard deduction of about $5,900 (single) or $8,900 (couple) for 2002. (Note! These figures are approximate, and are for illustrative use only. The IRS usually releases official numbers in December.) In general, expenses exceeding 7.5% of adjusted gross income (AGI) are deductible.

Example: Jane is age 78 and files singly. Her adjusted gross income is $13,000. Her deductible medical expenses include:

Medicare Part B premiums:	$648
Supplemental health insurance premiums:	$2,576
Prescription drugs:	$2,360
Optical services:	$135
Eyeglasses:	$325
Dental services:	$860
Unreimbursed expenses:	$216
Total medical expenses:	$7,120
Less 7.5% of AGI:	$975
Allowable deduction:	$6,145

For more information about allowable medical deductions, see IRS Publication #502 Medical and Dental Expenses. Call the toll-free IRS Forms and Publications telephone line at 1-800-TAX-FORM
(1-800-829-3676) to place your order or visit http://www.irs.gov.

For more information about how to take medical expense deductions, check a good tax guide such as J.K. Lasser’s “Your Income Tax, ” available at many bookstores and libraries.

December 2002