Medical Expense Deductions 2024: What Whites Crossing Families Need to Know About Healthcare Tax Savings

Maximize Your Healthcare Savings: Essential Medical Expense Deductions That Could Save Whites Crossing Families Thousands in 2024

With healthcare costs continuing to rise, families in Whites Crossing and across Pennsylvania are looking for every opportunity to reduce their tax burden. The good news? Taxpayers can deduct qualified, unreimbursed medical expenses that are more than 7.5% of their adjusted gross income, and understanding these deductions could result in significant tax savings for your family.

Understanding the 7.5% AGI Threshold

The key to medical expense deductions lies in understanding the threshold requirement. You can only deduct spending to the extent that the expenses exceed 7.5% of your AGI. For example, if you have an AGI of $50,000 and $10,000 in total deductible medical expenses, 7.5% of $50,000 is $3,750. You can deduct $6,250 of medical expenses as part of your itemized deductions.

This threshold means that families with significant medical expenses are most likely to benefit from these deductions. However, it’s important to note that you should make sure the total of all your itemized deductions exceeds the standard deduction for your filing status. If your itemized deductions add up to less than your standard deduction, it may not make sense to itemize.

2024 Standard Deduction Amounts

For tax year 2024, the standard deduction for single filers and for those who are married but filing separately is $14,600. For married couples filing a joint return, the standard exemption is $29,200. This means your total itemized deductions, including medical expenses, must exceed these amounts to be beneficial.

What Medical Expenses Qualify for Deduction?

The IRS defines medical expenses as the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners.

Specifically, qualifying expenses include:

  • Payments to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists and other medical practitioners. Insurance premiums for medical care or long-term care insurance are also deductible if they’re not paid by your employer and you pay out of pocket after taxes
  • Prescription drugs, medicines and other medically necessary items including insulin, prescription drugs, dentures, eyeglasses, contacts, hearing aids, crutches, wheelchairs, service animals and more
  • Dental spending on cleanings, X-rays, fillings, braces and other treatments, but not for cosmetic processes like teeth whitening
  • Miles for traveling to and from medical appointments at a rate of 21 cents per mile in 2024
  • Personal protective equipment, such as masks, hand sanitizer and sanitizing wipes, for the primary purpose of preventing the spread of the coronavirus

Important Restrictions and Requirements

Not all medical expenses qualify for deduction. You are not allowed to deduct medical expenses you have already been reimbursed for. Only medical expenses accumulated in the same tax year are eligible to be written off. Additionally, if you use funds from a flexible spending account (FSA) or health savings account (HSA) to cover your medical costs, you may be unable to deduct those expenses from your taxes. FSAs and HSAs are designed to offer tax advantages to their users. With an FSA, you can contribute pre-tax dollars to the account, which can then be used to pay for qualified medical expenses.

Documentation and Record-Keeping

Recordkeeping is crucial — keep meticulous documentation of your medical expenses to support your deduction. Only unreimbursed expenses can be deducted. If insurance covered the cost, you can’t claim it on your tax return. Make sure to save your receipts and invoices for all the qualified expenses you’re planning to deduct. This way, when you sit down to file, the process will be much easier.

State Tax Considerations

While federal medical expense deductions require expenses to exceed 7.5% of AGI, your state might have a lower AGI threshold, which could save you money. In New Jersey, for example, the AGI threshold for deducting medical expenses is just 2%, which means taxpayers there might get a break on their state income taxes even if they can’t get one on their federal income taxes. It’s important to find out what your state’s rule is; you might leave money on the table otherwise.

Getting Professional Help

Given the complexity of medical expense deductions and the need to determine whether itemizing is beneficial for your specific situation, working with experienced tax professionals whites crossing can be invaluable. Professional tax preparers can help you navigate the intricate rules, ensure you’re capturing all eligible expenses, and determine the most advantageous filing strategy for your family’s unique circumstances.

Since everyone’s situation is different, a tax professional can help you with deciding whether to itemize or take the standard deduction. The general rule is easy—you get to pick the bigger of the two: Either the standard deduction that all taxpayers are entitled to, or itemized deductions, if larger.

Maximizing Your Medical Deductions

If you reach the 7.5 percent AGI threshold, likely because of big-ticket items, make sure you are calculating all medical expenses for the year. Those unreimbursed costs can range from items like eyeglasses and hearing aids to CPAP machines and crutches.

Consider timing your medical expenses strategically. If you’re close to the threshold in one year, you might benefit from scheduling elective procedures or purchasing necessary medical equipment before year-end to maximize your deduction potential.

Looking Ahead

There were no new medical deductions introduced for tax year 2024, but there are many items that qualify. IRS Publication 502 includes an alphabetical list of common expenses and their treatment under federal tax law. Even if you don’t meet the threshold to deduct medical expenses on your tax return, this list can be useful to know what expenses qualify for flexible spending accounts or health savings accounts.

Medical expense deductions represent a valuable opportunity for Whites Crossing families to reduce their tax burden, particularly during years with significant healthcare costs. By understanding the rules, maintaining proper documentation, and working with qualified tax professionals, you can ensure you’re taking advantage of every deduction available to you while remaining compliant with IRS requirements.