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Writing off medical expenses on your taxes

Writing off medical expenses on your taxes for qualified

You already know that you’re legally obligated to pay your taxes, but that doesn’t mean you should pay more than you owe.

Each year, American taxpayers leave money on the table by missing some key deductions. Run through these commonly overlooked write-offs to see if there are any you should be taking. It might just mean more money in your pocket this year.

1. Education

When it comes to education, you may be able to deduct up to $4,000 for tuition-related expenses for you, your spouse or a dependent. You also may be able to deduct up to $2,500 in interest paid on a student loan in 2013.

In addition to these deductions (which lower your overall taxable income), there are also two relevant credits that could save you thousands: the American Opportunity Tax Credit and Lifetime Learning Credit. IRS Pub 970 covers all the details.

2. The Job Hunt

If you were looking for a job in 2013, you may be able to deduct your job-search expenses — and that’s true whether or not you actually found a new job. Expenses can include employment agency fees, costs for printing and mailing resumes, advertising, and travel expenses for interviews.

But the caveats include:

Your job search must be for a position in the same line of work

You can’t deduct expenses if it’s your first job

These expenses are part of your “miscellaneous deductions,” which need to exceed 2% of your adjusted gross income to qualify

Refer to IRS Pub 529 for more details on all of this.

3. Home Ownership

If you bought or owned a home in 2013, you’re probably already aware that you can include your mortgage interest in your itemized deductions. But there are other tax deductions related to home ownership that can add up as well.

Writing off medical expenses on your taxes IRS Form

You can deduct what you pay in property taxes, interest paid on a home equity loan, any points you paid when you bought your home, premiums paid for Private Mortgage Insurance, and potentially any home improvements made for medical care.

4. Health Costs

Did you have a lot of medical and dental expenses last year? If your medical expenses exceeded 10% of your adjusted gross income for 2013, you can claim a deduction with your itemized deductions. Potential deductible expenses include preventative care, surgeries, doctor’s visits, fertility treatments, psychologist and psychiatrist visits, prescription medication, glasses, contact lenses and even the cost of travel for medical care.

Generally speaking, you cannot deduct non-prescription drugs, your health club dues or anything that was reimbursed by insurance. You also cannot include your health insurance premiums (although self-employed people can deduct their health insurance costs separately). IRS Publication 502 gives the details on itemizing medical expenses.

5. Charitable Donations

If you’re itemizing your deductions on Schedule A, any charitable donations can help lower your tax bill. This includes any cash donations you made throughout 2013 — don’t forget any text message donations (note: Your cell phone bill is a sufficient record as long as it shows who you sent money to, when and for how much).

If you cleaned out your closet and donated items (clothes, furniture, etc.) to Goodwill or another charity, you can deduct the value of these items.

Get a receipt in case you’re audited. In addition, if you volunteer for a qualified organization, you can’t deduct the value of your time, but you can deduct travel expenses for getting there (14 cents per mile). Refer to IRS Pub 526 for more details on what can and can’t be deducted.

6. Moving for Your Job

If you landed a new job and moved in 2013, congratulations — your moving expenses may be deductible. And the good news is that you can take this write-off even if you don’t itemize your deductions. Check out IRS Pub 521 to see if you qualify.

In general, your new job location must be at least 50 miles away from your home (or 50 miles farther from your old home than your previous job was from your old home).

7. Energy Efficiency Upgrades

If you made your home more energy efficient last year, you may qualify for a tax credit. For example, you may be able to claim a credit of 10% of the cost for qualified energy efficient insulation, windows, doors and roof for your home, as well as 30% of the cost for installing alternative energy equipment in your home (such as solar hot water heaters or wind turbines).

These credits are both claimed on IRS Form 5695. In addition, for 2013, the purchase of plug-in hybrid-electric and electric vehicles may qualify for a tax credit.

8. Self-Employment Expenses

If you’re self-employed (whether it’s your full-time job or a part-time gig ), you’ve got a grab bag of deductions to pull from. You can deduct expenses from your home office (including pro-rated rent/mortgage, energy bill and insurance for that part of the house).

Don’t forget whichever conferences you attended in 2013, or the books, subscriptions, technology and office supplies you purchased to keep your business going. In addition, you can deduct your health insurance, as well as 50% of your self-employment tax. Visit the IRS’ self-employed tax center to learn more.

9. Children

If you welcomed a new baby in 2013, you are eligible for new tax deductions -– including another exemption (which represents a $3,900 deduction for 2013). Parents that meet certain income requirements can qualify for the Earned Income Tax Credit as well as the Child Tax Credit. You may also be able to claim the Child Care Tax Credit for qualified child care costs for any care provided so you could work or look for work.

10. Parents as Dependents

Most people know to claim children as dependents, but fewer are aware that if they cared for an elderly parent, that parent may qualify as a dependent. The same applies to other relatives such as uncles, aunts, grandparents, nieces, nephews, etc. (note that certain relatives do not have to live with you to be considered a dependent).

To claim a dependent on your tax return, you have to meet certain criteria, including that the dependent’s income can’t exceed $3,900 for 2013 and you need to have provided at least half the support for that person. Check out IRS Pub 501 for more details.

Keep in mind that this is all general information to put these valuable deductions on your radar. You’ll still need to research the relevant IRS documents or check with your tax advisor to make sure you qualify for a particular credit or deduction.


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