Medical expenses are inevitable and people are always burdened with the costs that always seem to rise up. There is a way to benefit from these medical expenses; however, you need to make sure that you qualify. The Internal Revenue Service or IRS gives medical tax deductions as long as the medical cost you are charged for is more than 7.5% of your gross income. Some people tend to ignore this tax return because of the seemingly unattainable percentage figure. What you need to know is this figure is totally achievable. You can include medical, as well as dental bills for you, your spouse and your dependents to reach the deduction limit. You might even be able to include medical expenses that you paid for your parents as well as your deceased family members. Listed below are some of the most overlooked medical tax deductions that you need to be aware of:
1. The IRS considers travel expenses to and from medical treatments to be tax deductible.
2. When you made payments for insurance from your already taxed income, you can list this under your itemized deductions as well. Make sure that you take note of how long the insurance is for as they have certain limits depending on your age.
3. Simple medical treatments such as eyeglasses and contact lenses are also tax deductible. Although they may not seem to be medical expenses, the IRS has given you the chance to benefit from them.
4. If you had a checkup and your doctor orders you to install a certain medical equipment in your home, the equipment itself and the electricity costs needed to operate it may qualify to be deductible. They may not be entirely deductible but they can be, at least partially.
Expenses which made you suffer an illness or a dependent can be deductible. Keep in mind though, that itemized deductions will not include meals and lodging costs.
6. Surgeries conducted to correct vision such as laser vision corrective surgery is also a tax-deductible procedure.
Listed above are some of the most overlooked tax deductions that people miss. However, people who are health-conscious can also benefit from the IRS. Weight-loss programs that are medically necessary and recommended by doctors can now also count as a deductible medical expense. If you have or your dependent has special needs, there are costs that you can add to your list of deductibles. You can include wheelchairs, hearing aids, crutches, etc.
Medical tax deductions are not limited to hospital and medical equipment expenses. When you have specialized needs, home changes can be written off as well. These changes include installing ramps, widening doors, lowering counters and cabinets, adjusting fixtures, improving landscape for easy access and buying a chair lift. To make sure that these changes can qualify, make sure that you have a recommendation from your doctor. The recommendation should state the importance of the change in your home to help improve your medical condition. On the other hand, if you include home changes that will increase your house’s value, the only deductible expense will be the difference of the amount subtracted from the project’s cost which increases your property value.
While there are other medical expenses and surgeries, anything related to improving your physical appearance is not tax-deductible. These include cosmetic surgery, health club dues as well as weight loss programs that are not medically recommended by your doctor. Always be honest when listing down the areas which qualify for deductions to avoid having complications in the future. It would be best to go over your credit report and credit scores with a qualified tax adviser so he or she can help you identify the items that you can add to your itemized deductions. Aside from that, he or she might even point out more deductible areas that you might miss.
Park City (PRWEB) September 14, 2014
Today, Zane Benefits, the number one online small business health benefits solution, published new information on who can administer an HRA.
According to Zane Benefits website, Health Reimbursement Arrangements, also referred to as Health Reimbursement Accounts or HRAs, provide small businesses an affordable health benefits solution. A common question from small businesses is “who can administer the Health Reimbursement Account?”
HRAs are authorized under Section 105 of the Internal Revenue Code, and are a type of self-funded, tax-favored plan that may be offered either in conjunction with a group health plan, or as a standalone plan to reimburse qualified out-of-pocket medical expenses and insurance expenses.
With a standalone HRA, a business would use the HRA to reimburse employees for qualified medical expenses and individual health insurance premium, instead of offering a group health insurance plan.
Reimbursements are generally excludable from the employee’s gross income under Internal Revenue Code Sections 106 and 105. Reimbursements the business pays are tax-deductible.
For a business to administer an HRA, they need to have legal HRA Plan Documents in place. An HRA Plan Document describes the HRA Plan’s terms and conditions related to the operation and administration of the HRA. Since an HRA is subject to ERISA, a legal HRA plan document must be provided in writing.
In addition to the HRA Plan Document, a business needs to make sure they have certain safeguards in place to stay compliant with the IRS, ERISA, HIPAA, and ACA.
Because of these compliance reasons, and for ease of use and time savings, most businesses use a third party to administer the HRA.
An HRA Software provider helps a business: set up the HRA, create and distribute HRA plans electronically, provide a “quickbooks-like” tracking of HRA funds, review claims for reimbursement, keep medical receipts on file electronically, and notify the employer (through the software) when to reimburse employees via payroll. HRA Software does not require pre-funding of HRA allowances, and is not a fiduciary.
HRA compliance requirements:
1. Tax Savings & IRS Compliance
2. Federal Compliance:
HIPAA (Medical Privacy): Employees medical information needs to be kept HIPAA-protected, and all medical documentation stored in compliance with HIPAA for 10 years, as required by the IRS for audit purposes. Employers should never see employees medical information, or even the type of medical expenses, to stay HIPAA compliant and stay nondiscriminatory.
ERISA: Under ERISA, employers are not allowed to endorse a specific individual health insurance plan. When offering an HRA, the employer should not know the details of individual health insurance plans purchased by employees, or even if they are seeking reimbursement for a health insurance premium (only that it is a qualified medical expense allowed by the HRA).
3. The Affordable Care Act (ACA) has introduced new requirements for HRAs including how benefit information is presented to employees, new reporting forms, and new plan design requirements.
Click here to read the full article.
About Zane Benefits
Zane Benefits was founded in 2006 to provide a revolutionized SaaS (Software-as-a-Service) administration platform (“ZaneHRA”) for Health Reimbursement Arrangements (HRAs) and defined contribution health care. The flagship software provides a 100% paperless administration experience to small businesses and insurance professionals that want to offer better health benefits without a traditional group health insurance plan at lower costs. For more information about ZaneHRA, visit http://www.zanebenefits.com.
For example, if someone paid for some medical insurance premiums in late 2013 and never took that deduction before on the 2013 return(because it was for an expense in 2014). Can they still claim the tax deduction in 2014. The reason being no fault of their own other than the billing cycle was set up that way.
Also in regards to other things in a general sense. If you have other various deductions that you overlooked in years past are you allowed to take those.
Answer by the tax lady
If you paid it in 2013, you would deduct it (if possible) in 2013.
Answer by MadMan
You can only take deductions in the year that you actually paid them. So when paying something in advance, it is OK to take the deduction in the year paid. If you forget to take a deduction in a previous year, you have to amend that year’s tax return.
Answer by Bobbie
The expenses that are paid during that tax year would only be deductible in the tax year that they are paid on that tax years 1040 schedule A itemized deduction tax form as a part of all of your other unreimbursed medical expenses subject to the 7.5% of adjusted gross income limit before any of the amount could be used and added to all of your other itemized deductions for that tax year.
Use the search box at the www.irs.gov website for Publication 502 Medical and Dental Expenses
What Expenses Can You Include This Year?
You can include only the medical and dental expenses you paid this year, regardless of when the services were provided.
If you did not claim a medical or dental expense that would have been deductible in an earlier year, you can file Form 1040X, Amended U.S. Individual Income Tax Return, for the year in which you overlooked the expense. Do not claim the expense on this year’s return. Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later.
You cannot include medical expenses that were paid by insurance companies or other sources. This is true whether the payments were made directly to you, to the patient, or to the provider of the medical services.
Hope that you find the above enclosed information useful for your situation and good luck to you.