Healthcare

Seniors Beware - Obamacare Will Be Cutting Your Medical Deductions

Seniors Beware - Obamacare Will Be Cutting Your Medical Deductions

Seniors need to take note that there is a change coming 2017 that will have an impact on their ability to itemize their medical and dental expenses. Historically, all taxpayers who itemize their deductions have been able to write off any medical or dental expenses that represent more than 7.5% of their adjusted gross income. That changed with the passage of the Affordable Care Act, as it raised the percentage from 7.5% to 10%. To help seniors adjust to this shift, the 7.5% percentage remained in place for those over the age of 65 – but only temporarily, and the grace period is about to end.

The Affordable Care Act allowed those who are 65 or older, and married couples where either spouse is 65 or older) to continue to write off those healthcare expenses over the 7.5% threshold through the end of tax year 2016. Now that 2017 is right around the corner, seniors are subject to the exact same limitation as the rest of the country, and they will be held to the same 10% medical deduction limit.

Getting Around the Deduction Threshold Increase

Once 2017 arrives, all American taxpayers will unfortunately be held to the same Adjusted Gross Income threshold of 10% before they can begin itemizing medical and dental deductions. Those who fall into this age group and who do itemize may want to look ahead and see whether they have any medical or dental expenses that they anticipated for 2017 that they can move into the next few months.

Though elective cosmetic surgeries like nose jobs or liposuction are not eligible for a deduction, there are plenty of medical and dental expenses that are, including replacing prescription glasses, prescription medications that you take on a regular basis, and dental work that you know you’re going to need. For those who have unpaid medical expenses or who are paying a hospital bill over time, it may be a good idea to expedite your payment schedule and pay more of your bills in 2016 so that you can write more off.

It is important to note that this strategy probably only makes sense for those who do itemize. People who are 65 or older who take the standard deduction rather than itemizing will not reap any benefit from incurring greater medical expenses in 2016 - they will probably just end up with less cash in their pocket. If you have questions as to whether speeding up your medical expenses would be a good tax strategy, contact a tax professional.

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Spencer Wilson

Spencer Wilson

Spencer Wilson, EA is a tax preparer based in Long Beach, CA. Spencer Wilson Financial Management Services has been serving the Greater Los Angeles Area and Orange County since 2004. <br /> We began in the heart of Naples in Long Beach and we continue to work hard offering tax preparation and planning, business accounting and bookkeeping and payroll services . <br /> We have helped many different people and businesses succeed financially and take control over their finances.

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