With all of the attention given to the new tax provisions passed in the American Taxpayer Relief Act of 2012, it may be tough to focus on last year’s laws in order to complete last year’s tax return. Whether you’re planning to complete your return by April 15 or file for an extension, don’t forget the deductions and credits available for 2012 – especially when it comes to medical expenses.
With so many boomers caring for aging parents, you may be eligible to deduct some of those expenses. If Mom earned less than $3,800 in 2012 (in most cases, that income level excludes Social Security benefits) and you provided more than half of her financial support, you may be able to claim her as a dependent – with the accompanying dependent exemption. This is true even if she doesn’t live with you.
In fact, if you paid for any of her medical or nursing care expenses, as well as home medical equipment or improvements for wheelchair access, you also may be able to itemize your costs as qualified medical expenses. Your 2012 return is the last one in which you can itemize and deduct medical expenses that total more than 7.5 percent of your adjusted gross income – including out-of-pocket expenses for medical, dental or vision care. Starting in 2013, the threshold for itemizing medical expenses will be 10 percent.
Other deductible medical expenses include:
· The standard mileage rate is 23 cents per mile of use of your car for medical purposes
· Premiums for Medicare Part B, Part D (Prescription Drug) or a Medicare Supplemental plan that were deducted from your Social Security check may qualify as deductible
It’s a good idea to incorporate tax planning as part of your overall financial plan. If you’d like to discuss strategies you can employ today to help reduce your tax bill in the future, please give us a call.
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