Qualified Individuals Medical expenses paid for the taxpayer, taxpayer's spouse, or dependent For dependents: if the taxpayer could take a dependency deduction except for the failure to meet the gross income or joint return tests For children of divorced parents: the parent need not be the custodial parent in order to take deduction for medical expenses paid on behalf of a person
Qualified Individuals • Medical expenses paid for the taxpayer, taxpayer’s spouse, or dependent • For dependents: if the taxpayer could take a dependency deduction except for the failure to meet the gross income or joint return tests • For children of divorced parents: – the parent need not be the custodial parent in order to take deduction for medical expenses paid on behalf of a person
Qualified Medical Expenses Those paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, including transportation, meals lodging, certain capital expenditures, medical insurance premiums. In 2001 self-employed individuals may deduct 60 %of health insurance as a deduction for AGL. In 2002 will the percentage will increase to 70 No cosmetic surgery unless it treats illness or promotes proper body function
Qualified Medical Expenses • Those paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, including transportation, meals & lodging, certain capital expenditures, & medical insurance premiums. • In 2001 self-employed individuals may deduct 60 % of health insurance as a deduction for AGI. In 2002 will the percentage will increase to 70% • No cosmetic surgery unless it treats illness or promotes proper body function
Qualified Medical Expenses Transportation that is primarily for and essential to qualified medical care Medical insurance premiums Qualified long-term care insurance premiums Capital expenditures must meet standard
Qualified Medical Expenses • Transportation that is primarily for and essential to qualified medical care • Medical insurance premiums • Qualified long-term care insurance premiums • Capital expenditures must meet standard
Amount And Timing Of Deduction Medical expense deduction is only allowed to the extent qualified medical expenses exceed 7.5% of AGI During tax year reimbursements reduce allowable deductions Subsequent tax years reimbursements included in gross income under the tax benefit rule
Amount And Timing Of Deduction • Medical expense deduction is only allowed to the extent qualified medical expenses exceed 7.5% of AGI • During tax year - reimbursements reduce allowable deductions • Subsequent tax years - reimbursements included in gross income under the tax benefit rule