Wednesday, May 23, 2007

IRS Note

For the record, if your medical expenses in a tax year exceed 7.5% of your AGI (and you file long form 1040), you can itemize and deduct your medical expenses. This might seem like a lot, but check out these scenarios...

You make $50k, you only need to spend $3750 in the year on medical expenses, so two root canals, an eye doctor appointment and contacts, and 12 months of birth control pills. BINGO, you're there.

You make $100k, you only need to spend $7,500. You and your husband are infertile and need IVF (with ICSI) for $15,000. You hit it and them some. And heck, throw in a high-deductible health insurance delivery of your IVF twins via c-section, and you just played the taxation lottery and won. But, let's say the people in this example didn't have all the money right away, so they did egg retrieval and ICSI in November and babies weren't born until the following year. That twin delivery via c-section (and possible NICO stay for preemie babies) would have to exceed 7.5% again for them to deduct those expenses. Timing the expenses is critical. There is a reason doctor's offices and dentist's offices are full in January.

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