With tax day around the corner on April 17, it’s time to gather those W-2s and financial statements in hopes that your return will equal a big check. Know what may help? Health-related tax deductions, which can add up for those who qualify.
While crunching the numbers may require some due diligence, such as sorting drugstore receipts, tallying mileage to doctor appointments and tracking down 2017 medical invoices, the payoff of reducing your taxable income may be worth the work.
UnitedHealthcare has some suggestions to keep in mind during tax season.
Clock It: The IRS allows a tax reimbursement of 17 cents per mile for travel to and from medical appointments, so make sure your travel log is up to date.
Itemized vs. standard deductions: Is it really worthwhile to organize all those 2017 medical expenses?
In 2017, if you are itemizing deductions, you may deduct medical expenses once they exceed 7.5 percent of your adjusted gross income. For example, if your adjusted gross income is $50,000, the first $3,750 of medical expenses are not deductible, and neither are any expenses that you were reimbursed for or paid for with pre-tax dollars. Any non-reimbursed expenses beyond $3,750 would be deductible.
What can you deduct? As a general rule, procedures that are medically necessary are deductible while enhancements that doctors wouldn’t consider medically necessary, or are considered cosmetic, are not. Health insurance premiums may also be claimed as a deduction, if you pay your premium entirely on your own. If you do not pay your premium on your own, or your health insurance premiums are paid on a pre-tax basis, you cannot claim them as a deduction.
Top off your HSA: If you have a Health Savings Account (HSA), you may want to consider topping off your pre-tax contribution. The maximum 2017 contribution is $3,400 for self-only coverage or $6,750 for family coverage, and if you’re over 55 you can stash away an additional $1,000 as a “catch-up” contribution. The deadline for contributing for 2017 is tax day: Tuesday, April 17, 2018.
An HSA combines the flexibility of a medical insurance plan with the cost effectiveness of a tax advantaged savings account. HSA dollars cover qualified medical and out-of-pocket expenses, including those that may not be covered by your health plan.
HSAs also have evolved into a handy record-keeping tool so you have the necessary documents on hand at tax time by allowing you to scan receipts and directly attach the expenses to your account, keeping documentation archived electronically.