medical deductions question

A cash basis taxpayer deducts expenses when they are paid. So if you incurred expenses in 2006 that we not paid until

Medical expenses are claimed in the year that you PAY your part of the bill, regardless of when incurred. If payment is made by credit card, that is considered paid on that date - not the date that you pay the credit card bill.

You deduct them in the year you pay them. Charging to a credit card constitutes payment regardless of when you pay the credit card bill.

No

The insurance forms show only how much you're supposed to pay. For the life of me, I can't figure out why mine say "retain for tax purposes" when they're useless for tax purposes. You need proof of payment.

-- Phil Marti Clarksburg, MD

Standard practice is for individual tax returns to be calculated on a cash basis, so you should only include medical payments made during the tax year in question. This may, however, include payments for services rendered in the previous year -- and any checks mailed as of December 31 of the tax year, would qualify, even if they don't get deducted from the account until the following year. Your records should be carefully organized, but can include receipts, statements, cancelled checks (or photocopies of same) -- or any written proof of payment. Bill

"Jane" wrote

You deduct medical expenses in the year paid - with cash, check or credit card.

Canceled checks are not proof positive that a valid medical expense was paid, so keep the receipts, claim forms, EOB's, etc. in addition to the check or charge card statement.

-- Paul A. Thomas, CPA Athens, Georgia

The medical expenses are deducted in the year they are paid. Generally, taxpayers report their income and expense on a "Cash Basis" and use a "Calendar Year" to report . They report their income as they receive it and report their expense when they pay it.