Does anyone know if medical expenses are deductable and what percentage? I heard it was 7% of your income. Does that mean all expenses that are over 7% are deductable.
Say, for instance, you made $100,000 . Would you have to have $7000 in medical or would it be all expenses after $7000? Also I heard this would include Health Insurance premiums.
Can anyone explain this to me in a way that I can (hopefully) understand?
The deduction depends on your AGI (Adjusted Gross Income). The amount of medical expense (per the list of allowable items) that *exceeds* 7.5% of AGI is deductible.
Thus, if your AGI is $100,000, then the amount of medical expense that exceeds $7,500 ($100,000 x 0.075%) is deductible. If medical expense is $8,500, then $1000 of it would be deductible. If medical is $5,000 then none of it would be deductible.
And don't forget that if your medical insurance premiums are paid out of PRE tax dollars, that they can NOT count towards the 7.5%.
The easiest way around this is to use a flexible medical spending account if your employer offers it. All of the money that goes into it from your paycheck comes out pre-tax...that way you don't have to worry about meeting that 7.5% threshold, and you aren't limited to deducting just the amount that exceeds the 7.5%.
