The end of the year is on its way. Have you racked up a stack of health care receipts to send to your flexible spending account? If so, it’s time to tally up the damage. Those of you who have spent more than your account will cover may be in deduction territory this year.
How will you know what to deduct? Almost any legitimate medical expense is covered. If your FSA and your insurance company haven’t reimbursed you for some of your health care costs, add them together. Anything in excess of 7.5% of your adjusted gross income is deductible.
If you’re far from that mark, congratulations on your good health. But if you’re within a couple hundred dollars of the 7.5% limit, it may be time to consider some discretionary spending. Have you been putting off dental work? Maybe you need a new pair of glasses or a six-month supply of Advair. Deducting these expenses from your income is like getting a 25% discount.
Better yet, the deduction applies not just to your own medical expenses but also to those of your family. And don’t forget that you can deduct the cost of your health insurance premiums too. If you’re like most of us, they are a big part of your family’s yearly health care budget, and claiming them on April 15 could help you save some serious cash. Of course, not everything is deductible. For instance, cosmetic surgery, spa treatments and health club memberships don’t qualify, so if Botox and a personal trainer were on your sweetheart’s holiday wish list, don’t expect the tax man to help you out.
There is just one catch. In order to deduct medical expenses on your 2009 tax return, you must spend the money before Jan. 1. This means that you only have a few days left to find your receipts, tally your costs and figure out whether it would make sense to spend a little bit more. If you’re close to the 7.5% cutoff, spending money on things you need could definitely make your tax return less painful. So go ahead — stock up on contact lenses and then give the IRS a little wink.
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