I don't know if this is on topic here, but since the NG is moderated I'll assume it is close enough if I see it (grin). In my real life I am a freelance writer and I have been given an assignment to write an article on deducting medical expenses on tax returns and the proper care and feeding of FSAs. It is for an audience of people with a chronic illness (arthritis specifically). It would cover which are allowed, the kinds of record-keeping that is needed, money saving tips such as what to weigh when looking at maybe moving expenses in to or out of the current year to work. It will be in the November/December issue essentially giving people ~8 weeks or so work things out. I would like three things from this group. (1). Any place I can go on the IRS or other website to get information that lay people might actually be able to understand. (2). Information on any group or subgroup who have a specialized interest in tax questions for people with chronic illnesses. (3). Anyone interested in being interviewed can contact me at kurtullman at sprintmail dot com. Thanks to the moderators and to anyone who replies. Kurt Ullman
have a long list of things you can deduct, but it's far fortotally comprehensive. Publication 552 covers record keeping.
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You can deduct mileage for driving to the hospital, if going to the hospital was the primary purpose of your trip. The rate is 16.5 cents per mile per
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have to keep a log showing date, beginning mileage, endingmileage, purpose of trip. It might be acceptable to instead have alog showing purpose of trip, roundtrip distance, number of such trips. Parking fees and tolls you pay while on the medical trip are deductible in full.
If you travel somewhere for a medical trip and need to stay overnight in a hotel, that stay is partly deductible (up to $50 per day). This is in publication 502.
Health insurance, long term care premiums (no idea what those are), and medicare premiums are deductible as a medical expense. If you're self-employed and cannot be covered by your spouse's plan, then health insurance is deductible against AGI instead, which is a better deal since reducing your AGI by $1000 is better than a deduction of the same amount.
FSA is a a good tool too. Only medical expenses above 7.5% of your AGI are deductible, whereas with an FSA it is all deductible. However, if your health insurance, out of pocket, copays, etc are already above 7.5% of your AGI, then the FSA might not be worth it.
However, if you're under AMT, only medical expenses above 10% of your AGI are deductible for the AMT tax.
In the new health care bill, only medical expenses above 10% of your AGI are deductible for the normal tax (as opposed to 7.5% now). This provision goes into effect 2013. But if you are 65 or older, then you get to keep the 7.5% until 2016. In 2017 everyone can only deduct medical expenses in excess of 10% of AGI.
Right now, you can use your FSA to pay for OTC medicines. But in
2011, as part of the new health care bill, you cannot use FSA to pay for OTC medicines unless the OTC medicine is prescribed by a doctor for a specific ailment or is insulin.
In 2013, the FSA maximum contribution will be reduced from $5000 to $2500. It will then be adjusted for inflation.
As for records, best to keep a statement from the doctor showing the date of service, procedure, amount, insurance negotiated amount, amount to be paid by you. Also have a bank record showing that you indeed paid the amount -- it should show date, paid to whom, amount paid. You can just put the hospital bills in order in a folder (or better yet get them online), and print out your bank history for the whole year.
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