Many existing or soon to be retirees should pay careful attention to the tax breaks that are available to them. As most of us know, when you’re on a fixed budget, every dollar counts. So, what are some of the tax breaks for retirees?
This can be overlooked as many elderly taxpayers may think there’s no chance of deducting these medical expenses. That’s not always true. We’ve seen countless examples of those on dialysis being prescribed specific supplements & vitamins by their doctor that goes beyond just caring for their general health. With the proper support, in those instances, the costs which can be in the several thousand dollar range and possibly greater are eligible deductions. Specifically, if we reference IRS Publication 502 page 16 — it states, “You cannot include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. Otherwise, these items are taken to maintain your ordinary good health, and are not for medical care.”
Travel to the doctor/hospital
Medical transportation mileage is deductible, at the rate of $0.23 per mile. If we reference a CDC study, it shows that 8.2 million Americans 65 or over are visiting the doctor more than 10 times per year. Let’s suppose some of those taxpayers visit the doctor 15 times and the average travel is 20 miles to and from the doctor. After incorporating the mileage deduction, that’s another $50 to $100 that can be included as a deduction when the taxpayer itemizes their return.
Paying for a caretaker
You may be able to deduct these expenses as a medical expenses. The main criteria is that the taxpayer must be chronically ill and the care givers must be required or prescribed by a physician. If those two criteria are met, then the taxpayer will need to determine if the costs exceed 7.5% of your adjusted gross income. If that’s the case and they do itemize on their tax return, then they can certainly claim the expenses as a deduction to your income.
Other deductible medical items
Prescription glasses and contacts, counseling, therapy, hearing aids and batteries (IRC Section 213(a)), dentures, oxygen, walkers, and wheelchairs.
More retirement tax questions? Please contact us.