The Doctor Will See You Now: Acceptable Medical Expenses
Review of acceptable medical expenses for tax purposes
It may be hard to go a complete year without spending money for health purposes. However, not everything we consider “healthful” counts as a medical expense! Generally speaking, the IRS only considers expenses specifically related to the medical community to be acceptable, and the states follow suit. That is, joining a gym, taking vitamins, and even putting Band-Aids® on boo-boos are not deductible for tax purposes.
What kinds of expenses count?
In Publication 502, page 2, the IRS defines medical expenses as “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease…and payments for legal medical services rendered by physicians, surgeons, dentists and other medical practitioners…to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.” (Yes, that is a direct quote from the IRS publication. Apparently, someone has a sense of humor.)
Ouch! (Changes to the Medical Expense Deduction)
Staying on top of the Medical Expense Deduction
Along with charitable contributions, state tax expense, mortgage interest, and real estate tax, many folks have been able to include a little something for medical expenses on their Schedule A: Itemized Deductions, but this is changing.
Here’s how it used to work: figure out your Adjusted Gross Income(AGI), take 7.5% of your AGI, and any medical expenses in excess of this amount get included with your itemized deductions. Basically, this meant that the government figured you should be able to afford to spend up to 7.5% of your available income on medical expenses, and anything beyond that merited special consideration, namely, a tax deduction.
What is Cake Day? (Plus, Cake Day Round Up 2016)
Our annual open house
Once again, we held a scrumptious, delicious, finger-licking, fun-filled open house…Cake Day! And the cakes were out-of-this-world awesome.
The winner? Sweet Eats! 2 of our 6 cakes were from Sweet Eats, and those 2 cakes ruled the day. Several people exclaimed the Vanilla Strawberry Cake was absolutely perfect because it was so fresh and not overly sweet. It featured 3 layers of yellow cake with 1 layer of fresh cut strawberries in a strawberry glaze, and 1 layer of vanilla pudding, iced with white whipped cream and vanilla cookie crumbles. And who doesn’t like chocolate?! The Chocolate Silk featured 4 layers of chocolate cake and 3 layers of chocolate mousse, with a chocolate buttercream icing and dark chocolate shavings.
The Apple Cinnamon Streusel from the local Dutch Wagon Market is always in demand! But the other entries could hardly keep up.
Folks enjoyed cake and coffee. Conversation ranged from exotic vacation cruises to a cute little Yorkie named Ruby who had her picture on the news during the recent blizzard – she was wearing pink snow boots! If only she’d been there to model them for us live… And some folks even dropped off their tax paperwork so we could get started on the work.
Sweet Eats is a Voorhees bakery with a new location in Marlton at the Crispin Square Shopping Center. They are not my client, but when you’re so good you win 1st place on Cake Day twice at the same time, you deserve a shout out!
If I had a hammer… (Or Cost vs. Value)
Why do services cost so much?
Did you hear the one about the heating contractor/washer repairman/lawn mower guy? The homeowners, at wit’s end, finally call for help to get the system back in action. The contractor shows up, listens to the tale of woe, inspects the equipment, considers the noises being made, then takes out a hammer, and whack! hits the equipment soundly in a particular place. The system immediately comes back online, no weird noises, no vibrations. The homeowners express amazement and gratitude. The contractor presents an invoice. The homeowners gasp. “But you’ve only been here 5 minutes!” they cry. “All you did was hit it with a hammer! We could have done that ourselves!” “Yes,” replies the contractor, “but I know where to aim.”
Experience. A large part of why a service costs so much is the sum total of the experience of the service provider.