The medical tax deduction is one of the most frustrating deductions. The last time I tried it, it was a 7.5% floor (had to look it up because it was raised to 10% under Obamacare).
I handled it for my parents with a father that has a similar situation to El Barto. My mother kept every out of pocket medical expense she could. I spent more time scanning and creating a relatively simple spreadsheet than all the time spent doing the rest of every other aspect of the their tax return. And their return is not W2 done 1040EZ easy.
I was able to get quite a bit from charitable donations (to places like Salvation Army, Goodwill, etc). But trying to get anything worthwhile past that medical floor was Man of La Mancha.
For those that just do the standard deduction, or more likely, too young to even mess with that medical expense floor, it works more or less like this:
Let's say you make $50,000
Your first $5,000 of out of pocket (not insurance paid) are not tax deductible. $50,000 x 10% = $5,000 floor.
Well if you make $50,000 (gross, not take home), then $5,000 is quite a bite out of your budget. Let's say you manage to make it to $7,500. You get to write off $7,500-$5,000= $2,500. That's a write off, not refund. If your tax rate is 23%, that means $575 (23% of $2,500) toward your tax liability. But not refundable. And not on top of your standard deduction. So you would have to have something like a big mortgage / property tax to first clear that standard deduction level.
Well, if you have major medical problems and only making $50,000 (usually the healthy spouse), the odds are very high that you had to give up your house to make ends meet.
Make more money so you can keep that house right? Well, the floor follows you. So if you get that $100,000/yr job, your medical floor is now $10,000.
Topic: How much is your tax refund/tax and what are you doing with your refund? (Read 4106 times)