I’m going to jump into the health care reform topic, just for a brief minute. Frankly, here’s my stand on this issue. While I’m ALL FOR everyone having the availability of health care, I can’t say that I agree at all with the way things have recently been done. (Another subject-for another article!)
It doesn’t take a rocket scientist to see that anytime the federal government takes charge of anything, it becomes a HUGE bureaucratic and EXPENSIVE mess! Can we at least agree on that much?
As a tax professional for many years, I have often said that if the IRS would begin by doing one simple thing, it would be a nice step in the right direction. I bet you’re wondering what I’m talking about. I’ll explain.
As you may or may not know, medical expenses are typically a deductible expense on your tax return. In order for this to be deductible though, you must be one of those taxpayer’s that itemizes deductions on Sch A. Furthermore, your medical expenses (this includes doctor’s visits, trips to the dentist & eye doctor, prescription drugs, co-pays, etc) are only deductible on your tax return once you hit that magic number (it’s different for everyone)~That is, 7.5% of your Adjusted Gross Income (AGI). Did I lose some of you here?
Let me illustrate this for you. Let’s say that you have an AGI of $50K. Simple multiplication: $50,000 x 7.5% = $3750. Any medical expenses that you have that are above and beyond $3750 become a tax deduction on your tax return~but, only if you can itemize. If you can’t itemize, then you don’t have the benefit of this deduction. Nice, huh?
So, back to my original thought from many years ago. If the IRS would do away with this 7.5% floor, and allow EVERYONE (whether you can itemize or not) to take a deduction for legitimate medical expenses, that would at least be a step in the right direction. Doesn’t this just make sense? Well, doesn’t it?
Well, hold on to your hat. That 7.5% floor is scheduled to become a 10% floor in the near future. Moving in the wrong direction here… Hey, it’s just my opinion!