- Medical and Dental Expenses
- Taxes You Paid
- Interest You Paid
- Gifts to Charity
- Casualty and Theft Losses
- Job Expenses and Certain Miscellaneous Deductions
- Other Miscellaneous Deductions
This is such a BIG topic and it’s not possible to answer every question here. I’m not your insurance specialist, I am your Income Tax Audit Specialist. Here is the introduction to this new tax wrinkle that may impact your current and future tax returns.
The healthcare coverage you currently carry for yourself and your family may be all you need. If you have what is called Minimum Essential Coverage, you probably don’t have to do anything.
But if you go without coverage for any part of the year, there are special rules that apply. If you don’t qualify for an exemption, you may need to make a special payment called an Individual Shared Responsibility Payment.
Who qualifies for an exemption? Those who…
- Do not have to file a tax return
- Do not have access to affordable health care
- Are a member of certain exempt groups
- Are suffering a hardship.
- Have other situations as shown at www.IRS.gov/aca
If you and your dependents do not have coverage and do not qualify for an exemption, then you may have to make a “shared responsibility” payment when you file your tax return.
This payment is either a percentage of your income or a flat dollar amount, whichever is greater. The payment is based on the number of months you go without coverage, or the number of months you are exempt.
If you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the Premium Tax Credit. This can help people with moderate income more easily afford the coverage.
If you meet the following requirements, there is a Premium Tax Credit:
- Your income must be within certain limits
- You must not be eligible for other coverage through an employer or government plan
- You cannot be claimed as a dependent on someone else’s return
- You cannot file your tax return using the Married Filing Separate status
When you apply for coverage through the Marketplace, you can choose to get the credit now or you can choose to get the credit later. If you choose to get the credit now, you are asking the marketplace to pay some, or pay all of the estimated credit in advance, directly to your insurance company. That will help lower your out of pocket premium costs. If you choose to get the credit later, you take that credit on your income tax return.
If you choose the advance payment, to get the credit now, be sure to report changes in your income or changes in your family size. Report these changes when they happen to ensure you are getting the correct amount of advance credit. This is important, because getting too much or getting too little credit can affect your income tax return refund or balance due.
I still get my insurance from a private insurance company. There is a lot to learn about ObamaCare and income taxes. In next week’s article, I will address the time line for getting coverage now for next year.
What can you deduct?
- Include only the medical and dental expenses you paid during the year. If you pay by cash, check or credit card at the time of your visit, you deduct the amount you paid that day. If you wait to be billed, you deduct the payment you made on the date you mailed the check. If you use a credit card, you deduct the amount that was charged on the date it was charged even though you might make payments on the credit card later, or even the next year. .
- Prescription drugs from within the US, not from other countries, are deductible. .
- Transportation to and from the health care service is deductible. The current mileage rate for medical reasons is 24 cents per mile. Keep a log of your medical miles driven. Travel to other cities or states may be deducible if the service you seek is not available in your city or town. .
- You can deduct the costs of equipment, supplies and diagnostic devices needed for these purposes.