New Changes to the Itemized Medical Deduction
For years, taxpayers have been able to claim an itemized deduction on their taxes for medical expenses. That deduction still exists, but the threshold has been increased starting this years, as part of the implemenation of Obamacare taxes.
When a taxpayer, spouse, and/or dependents accumulate large medical bills in a given year, the ability to deduct them comes as a welcome relief to many family. The rule-of-thumb was that the sum of medical expenses totalled 7.5% or more of the Adjusted Gross Income (AGI). So for instance, if a family’s AGI was $50,000, they could claim an itemized deduction of medical expenses if it was at least $3,500 (not including insurance premiums, etc).
Now beginning this year and beyond, the threshold has been raised to 10% AGI. That same family making $50,000 AGI needs to have accumulated $5,000 worth of qualifying medical expenses before they can claim that deduction on their tax return.
There is one group for which the floor is still 7.5%; that is persons who are age 65 and above. The 7.5% AGI calculation will remain as such for another 4 years until 2017.
For data through 2009 from the IRS, 10 million families used this tax deduction. Raising the threshold was a means to limit the amount of deductions taxpayers would claim starting this year, thereby raising more tax revenue to pay for Obamacare.
This change is found of found on pages 1,994-1,995 of the PPACA.
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