Reduce Your Medical Tax Burden the Easy Way
As technology improves medical care, the cost of that care rises. From 2010 through 2013 the cost of medical care for a typical American family of four rose 22 percent. In 2013, the average cost of health care for a typical American family of four totaled $22,030. To put these expenses into perspective, consider the following:
- American families spend roughly the same amount each year for health care as they spend to send a child to a four-year university.
- Payroll deductions for health insurance are almost equal to what it costs to buy groceries for your family for a year.
- Most annual deductibles for a family of four equal the cost of fueling your vehicle for a single year.
While these numbers might be shocking, there is an even more startling trend. Most Americans do not take advantage of medical tax deductions. Thus, they fail to offset the cost of health care by reducing their tax burden. The infographic explains how you can use this tax break by itemizing your medical expenses: You are allowed to deduct eligible expenses that exceed 10% of your total adjusted gross income. Eligible deductions include travel costs, insurance paid with taxed income, uninsured necessities, laser vision surgery, and physician-recommended equipment.
Health care tax credits range from $7,590, for families who earn between $15,000 and $30,000, to $9,932 for families who earn between $100,000 and $200,000. Those are big tax breaks that can really help offset the costs of medical care, especially for low-income families. However, while reducing your tax burden sounds like a good deal, the process of claiming medical expenses as a tax deduction is not so cut and dry.
What You Need To Know
The IRS has set rules for qualifying deductions. First, over-the-counter medications and supplies do not qualify. Elective surgeries, such as most cosmetic surgeries also do not apply. Most elective preventative health costs, such as your gym membership, do not qualify. In order to avoid any troubles with the IRS, do not exceed the 10% threshold for medical deductions and keep detailed records that prove your deductions were eligible medical expenses and not elective or self-help remedies.
That being said, you can learn how to take advantage of this tax advantage by itemizing eligible medical expenses. The money you save might feed your family for an entire year.
Guest post/infographic was contributed by Monica Gomez. Monica Gomez is a freelance health write. She likes helping people save money on their health care costs and she helped gather the information for this infographic.
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