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July 2007 A Fresh Look at Medical Expenses As medical costs continue to soar, it might be a good idea to reconsider whether or not you might benefit from a medical expense deduction. The following link (Deductible Medical Expenses) will provide a list of many deductible medical expenses, some of which you may not have realized were deductible medical expenses. Keep in mind though, only expenses that are not reimbursed are deductible. To receive a tax benefit from unreimbursed medical expenses you will need to jump through two hurdles. The first hurdle is the 7.5% of your adjusted gross income (AGI) hurdle. Here, only unreimbursed medical expenses exceeding 7.5% of your AGI are counted as an itemized deduction. The next hurdle
is the itemized deduction hurdle. Here, medical expenses that exceed the 7.5%
limit are combined with other itemized deductions (such as mortgage and
investment interest, taxes, and charitable contributions) to determine total
itemized deductions. You will benefit from your itemized deduction only to the
extent they total more than your standard deductions for the year. The 2007
standard deductions are generally as follows: If you are married, your standard deduction is increased by $1,050 for each spouse who is age 65 or over. If you are single, your standard deduction is increased by $1,300 if you are blind/age 65 or over. If it looks like your unreimbursed medical expenses will be high enough to jump these hurdles, it is time to accumulate and document your expenses with receipts. Please call us if you have questions.
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