I'm getting ready to do my 06 taxes soon and wanted to make sure I have everything in order. According to the IRS's website these are the laws that apply to claiming medical expenses. Summary: "You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income" Ok, basically I spent all my savings last year after a terrible snowboarding injury blew my heal apart. I ended up spending 23,000 out of pocket on Medical bills last year. I made about 44K after taxes. So here is the formula MED EXP:
24K
Income:
44K
7.5% of my AGI =3,300 So, 24,000 medical - 3,300 = 20,700. These are my Medical expenses Exceeding 7.5% of my AGI: This would amount to a write off of $20,700 I suppose
Is this the correct? Can I expect to IRS to just pay me all this? Also, would I just use a 1040 in addition to the Form
1040, Schedule A to itemize my medical expenses? Also, on the Form 1040, Schedule A at the top it says medical and dental expences in colum one and > (see page A1). What is page A-1 and where is it? Is this where I list all my itemized deductions? I have proof of all my bills. I haven't yet tried to fill out the forms but I need to know which ones I need to use. It seems rather simple. Should I see a tax specialist or get turbo tax or something like that? Thanks for any/all help. I used to just use taxbrain to file when I would do basic 1040EZ. Regards, Chris
Nowhere near. Rather than trying to figure it out from words, get yourself the 1040, Schedule A, and the 1040 isntructions, which include the instructions for Schedule A (pp A-1, etc.)
No. The best you can hope for is a refund of everything withheld (box 2 of your W-2).
Yes, if by "write off" you mean you will not have to pay income tax on $20,700 of your income. It however does not mean that the government will give you $20,700 as your next paragraph implies. "Form 1040, Schedule A - Itemized Deductions" is where you itemize deductions from income. You use it when all of those items the IRS allows you to deduct from income exceed the standard deduction which your filing status will permit. The IRS allows you to deduct medical expenses for which you are not reimbursed or not paid by others, medical insurance costs that you pay, dental expenses, etc. for you and your family (if any) subject to the 7.5% limitation. They also allow you to deduct other items as described on Schedule A. This year it appears that you will want to itemize rather than use the standard deduction. Make sure you include all those items that they will allow you to itemize and are applicable to you. For me, I find the instructions on how to fill out Schedule A is described on pages A-1 through A-7 of the 1040 tax package that IRS sent me in late December. It is to one of those pages that the "(see page A1)" refers to. Depending on which package they sent you, you may have to acquire a copy of those instructions from your library, IRS website, or other source. Even if your going to use tax software or a professional preparer, you'll probably want to get a copy so that you assemble the correct information and will understand what itemizing does. Once you have totaled all of your itemized deductions at the bottom of Schedule A, you also enter this total on Form
1040, line 40. On Form 1040, this will permit you to substract the total itemized deduction amount and your personal exemption from your AGI to arrive at your "Taxable Income". With respect to your proofs of all your bills, keep them in your records in case IRS needs to see them later. All they need to know now is their totals. Forms 1040 and Form 1040 - Schedule A will satisfy the requirements to cover those items associated with your medical expenses and other itemized deductions as you discussed here. You may also have to include other Schedules or forms to cover items of income or situations which you did disclose here. Based on the overall context of your statements and questions and reference to the type of forms you have filed in the past, you may want to consider preparation of this year's tax forms by a tax professional. You want to take advantage of all the itemized deductions you can and I get the impression that this is new to you. Unfortuately, you've had to spend an extra $23,000 to have the amount of your taxes reduced probably somewhere between $2,300 to $3,000 from what they would have been had you not suffered your accident. Hope you've recovered physically from it and it's only the financial recovery that will take a little longer.
No. The government doesn't pay you back your medical expenses. You get to reduce your taxable income by that amount. It results in a smaller amount of tax due, which means a larger refund in your case.
Yes.
You've got half of it figgured out, just follow the instructions.
Well, now that you have a snowboarding injury, you get to move up to the bigger form.
-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net
Yes, you can deduct your unreimbursed medical expenses above the 7.5% AGI floor on Schedule A. This includes ALL of your medical expenses, not just expenses incurred because of this injury. From your questions, it sounds like you need the instructions for Schedule A. They can be downloaded from
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- click on the "More Forms and Publications" link on the left side of the page. That's a fairly hefty medical deduction so expect the IRS to question it - meaning, have all of your receipts and proof that they weren't reimbursed by your health insurance and are in fact legitimate medical expenses. In your post you ask "Can I expect to IRS to just pay me all this?" I'm not sure what you mean by this. No, the IRS will not pay your medical bills. But you won't have to pay tax on about 20K of your medical expenses.
Page A-1 is the first page of the instructions to Schedule A, which can be found included in the general Form 1040 instructions. Provided you have the proper records for your medical bills, the IRS will allow you to deduct those expenses as miscellaneous itemized deductions (the IRS won't "pay" you anything - unless of course you had a lot of tax withheld from your pay already, in which case the IRS will "pay" you a refund of the excess withholding). The one thing you should be grateful for (taxwise, not healthwise - healthwise, you have my condolences) is that your income is sufficiently low that you most likely won't be subject to the AMT even though your medical expenses are almost half of your income.
Thanks a lot for your responses. I appreciate the input. I'll stop by my local library tomorrow to try and get all the forms. I keep downloading little portions of the forms from the IRS. I just need the whole 1040 to figure this out. I guess I won't be expecting to get a lot of money back but maybe I'll actually get a small return this year instead of paying out like I usually do! I'll post back and let you know how it goes. The good news is I have a functioning foot that very well could have been chopped off! Albeit it does have a TON of hardware in there Thanks a lot! Chris
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