Tax: How to deduct medical using a two year system

By: Chaele McMillan

7.5% rate
A critical strategy for maximizing medical expense deductions is known as "bunching." The idea is to pay as many medical bills in one year as possible. You can only deduct what you pay not what you owe. The 7.5% floor on medical expense deductions requires this to get the deduction Once your medical bills for the year exceed the 7. 5% the medical expenses above that amount are fully deductible. So if you have a few bills that are large amounts due in December and you know you will not exceed the 7.5 %, wait to pay. You may have a better chance exceeding the amount.

Planning your Surgery
For instance, if there is an elective surgery that you've been considering, have it done only in a year when you think the floor will be surpassed. Speak with your Doctor and ask if you can schedule one surgery the first of the year and the later at the end of the year. Make sure you allow yourself enough time to receive the bill and have the money to pay them. This will also save you money on your Insurance deductibles.

Save money on Long term care
When you pay for long-term care such as a nursing home, try to prepay for two years at a time. If you can’t pay for two full years ask to pay year and a half. Pay as much as you can one year. The next year don’t pay as much and repeat the following year.

Deductions
One way around the floor on medical expense deductions is to reclassify your medical expenses as something else. If a nurse must be hired to look after a dependent consider taking the dependent care credit.

You can pay your parents' medical expenses with their cash and take the deductions yourself. If your parent makes an unconditional gift to you, the money then yours. It is not taxable income. You can use that money however you want to, and if you want to your parents' medical bills that's fine.

The cost of a health club membership can be a deductible. Your membership can be a deduction if the membership is prescribed by your doctor to treat a specific physical ailment. Get the doctor's order in writing. The membership must be part of the treatment for a specific problem.

Keep up with all your deductions. You may be surprised what you have and remember to work on a two- year deduction system.

* Please contact a CPA before taking all deductions to make sure you are filing under the proper IRS coding.







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Chaele McMillan is a work at home mom. She owns several websites and is the Outreach Manager for Sunrise Retreats (www.SunriseRetreats.com)