The newly introduced Republican tax legislation enables substantial tax breaks for people doing their 2017 tax returns. As per the new rules, in case the total medical expenses spent in excess in 2017 were 7.5 percent or more of the adjusted income (the gross), deductible amount would be the money spent in excess of that threshold. The new calculations are a noticeable difference from the ones in 2016. About 10 percent base was then applicable for all the taxpayers with the exception of people aged above 65 years of age.
According to tax experts, the taxpayers who have a number of different deductions and their total value exceeds the standard deduction can score benefits from this legislation. Deduction for the married couples who file separately or single taxpayers in 2017 comes to $6,350. In case of married couples who file jointly, the amount comes to $12,700. The amount of tax comes to $9,350 for those who are heads of the households.
The AARP Public Policy Institute discovered that approximately 8.8 million US residents took advantage of the tax break available in medical expenses in 2015. By doing so, they saved about $86.9 US billion. Data crunching also revealed that 49 percent of the total taxpayers who choose the deduction enjoyed an income below $50,000. About 69 percent earned less than $75,000. It is apparent that the base of 7.5 percent can be applicable to tax returns of 2017 and also 2018. The threshold will revert back to 10 percent and applicable for all the taxpayers in 2019.
Terms and conditions
Prior to embarking on such a scheme, it is to be remembered that if a person has dependents, then any medical expenses for them will be added or included in the total. It must also be remembered that the qualified costs expense above the threshold of 7.5 percent can be potentially deductible. The list of medical expenses could range from eyeglasses and co-pays to travel expenses incurred due to medical care being received.
For those who are self-employed, rules pertaining to the health insurance premiums could be different. If the business has a profit, there is a possibility to write off premiums that were paid for longer-term care, health, and dental insurance applicable to both the policyholder and his or her dependents. Best of all, there is absolutely no requirement for itemization to take advantage of. It is to be kept in mind that the deduction value cannot be more than the profit.