Medical Expenses and Income Taxes
By keeping track of your EOB's and your statements, you can also keep track of the amount of money you are spending out of your own pocket. Most of these personal expenditures could be tax deductible.
Keep track of all the expenditures that you have regarding your medical bills. Anything that you, the parent, pay for the medical treatment and care of your child may be tax deductible. While Federal tax rules regarding deductions are clear, every state is unique. It would be helpful to consult with an experienced tax preparer in your state for allowable deductions.
WARNING: Internet tax sources are great for uncomplicated tax returns but if you have medical tax deductions chances are, you will miss several. Employing a professional to assist you in this matter would be highly recommended.
Case-in-point: Linda and her family filed their taxes for 2002 not realizing that the van purchase they had made to accommodate a lift conversion for their daughter's wheelchair was an allowed tax deduction. It was not listed on the Internet tax site as allowable. When filing their 2003 state tax return they went to a professional preparer who knew about the specialized equipment and asked if the deduction had been made. When she found out this had not been done the preparer immediately prepared an amended 2002 return to take the one-time deduction for the van/lift purchase allowed by our state. This resulted in a $2,500 refund which otherwise would have gone unclaimed. Lesson learned!
When in doubt...ask a professional!!
The following is a list of items that may or may not be tax deductible;
- Insurance premiums
- Gasoline and Oil purchases specifically for transportation to medical appointments
- Tollbooth fees
- Time lost from work
- Home modifications
- Out-of-pocket co-pays
- Dental treatments
- Mental health treatment
- Skilled care expenses (childcare by medically trained personnel not covered by insurance)
- Any billings not covered by your insurance but required for the treatment of your child.
These deductions are generalized and will vary from state to state. Some states will allow parents to count disabled children as two deductions while others only allow one. State tax laws vary widely.
Keeping a notebook with a page for each deduction category will be most helpful when preparing taxes at the end of the year. Adding the total amounts per page before taking it in to your tax accountant will speed up the processing of your tax return. You will also need to keep this list with your tax return. Don't forget to start a new list Jan 1st.
Feel free to notify us of any deductions we've missed that are applicable to your state. We would be happy to list them!