![]() ![]() ![]() In fact, my own sainted parents failed to itemize for three years running when they could have. It doesn’t matter if the relative lives with you or not.ĭon’t be surprised to discover that you can claim an itemized medical expense deduction when you thought you could not, especially if you are paying for Medicare and long-term care coverage. For a person to be your qualifying relative last year, you generally must have paid over half of his or her support for 2014 and the person must be your adult child, son-in-law, daughter-in-law, grandchild, father, stepfather, father-in-law, mother, stepmother, mother-in-law, brother, step-brother, brother-in-law, sister, step-sister, sister-in-law, aunt, uncle, niece, or nephew. The maximum premium amounts that you can treat as medical expenses are the age-based figures listed below (these numbers are adjusted annually for inflation).ĭid you pay health premiums for a qualifying relative last year? If you did, count these outlays too in figuring your total eligible medical expenses. Therefore, premiums you pay for a qualified policy are treated as medical costs for itemized medical expense deduction purposes, and they can help you clear the 10%-of-AGI or 7.5%-of-AGI hurdle. Under the federal income tax rules, a qualified long-term care policy is considered health insurance. Premiums for Medigap policies vary depending on the plan. If you have Medigap coverage, you don’t need Part C coverage and vice versa. Medigap Insurance is private supplemental insurance similar to Part C coverage. For 2014, the adjustment amount could have been up to $69.30 a month (up to $832 per person for the whole year). Higher-income folks pay an “adjustment amount” in addition to their basic premiums. Medicare Part D is for private prescription drug coverage. Medicare Part C is for private Medicare Advantage health plan coverage, which is supplemental to the government-provided Part A and Part B coverage. Now they do (see IRS Publication 502, Medical and Dental Expenses at the IRS website.) There are several different kinds of Medicare insurance. Some tax pros, including yours truly, had long believed this to be true, but the Form 1040 instructions and IRS publications provided no support. Just a couple of years ago, the IRS finally admitted that Medicare insurance premiums count as qualified health premiums for purposes of the itemized deduction for medical expenses. You cannot deduct premiums for insurance that cover loss of limbs or loss of earnings due to illness or injury. In the medical expense pot, you can include premiums for health policies that cover doctors and hospitals (so-called major medical coverage), dental care, vision care, and specialized health policies that cover things like accidents and cancer. General rule for deductible health-insurance premiums That’s why it’s important to identify all qualified expenses that you can throw in the pot, including health-insurance premiums. If your total qualified medical expenses don’t exceed the applicable percent-of-AGI threshold, you get no write-off. AGI is the number at the bottom of the first page of your Form 1040 it includes all taxable income items and selected deductions such as alimony paid, student loan interest (up to $2,500), and moving expenses. However, to actually claim a deduction on your 2014 return, your total qualified expenses, including eligible health insurance premiums, must exceed 10% of your adjusted gross income (AGI) or 7.5% of AGI if you, or your spouse if you are married, was age 65 or older as of Dec. As an individual taxpayer, you can potentially claim an itemized deduction for qualified medical expenses, including health-insurance premiums.
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