In December 2010 The Sarasota Herald Tribune published my version of the top 10 Screwiest Tax Provisions.

 Over the next ten weeks I am going to update that list here:

 Screwy income tax provision – #9

 Tax Planning: Medical Deductions:

The 7.5 percent medical deduction limit: The medical deduction has been limited to the excess over 7.5 percent of adjusted gross income for many years. Why have such a limitation? No one can answer that question. It makes no sense. Before that, it was 5 percent. It has gone through many changes over the last 70 years.

Generally speaking it tends to hurt the middle class taxpayer the most. That is who all the politicians claim they care about.

Under the new health care legislation, the limit will be raised to 10 percent of adjusted gross income after Dec. 31, 2012, except for individuals over 65. They can still use the 7.5%. After December 31, 2016 everyone is subject to the 10% rule.

Tax planning tips:

Bunch medical expenses into one year. If you can either speed up or postpone elective surgery or dental work do so in the year you expect to a lower AGI therefore raising the amount of medical expense that is deductible.

  • If only one spouse has significant medical expenses in one year consider filing separately. It works especially well if the spouse earning less also has less AGI.
  • Keep track of your medical travel expenses. They count also.
  • Your expenses must have been paid in 2014. It does not matter when they were incurred.
  • You cannot deduct expenses for which you were reimbursed.
  • If you require certain medical devices such as a wheel chair, special bed, etc. make sure you have a prescription.