Most people know that it is possible to claim medical expenses on tax returns. However, they may not be aware that orthodontics are considered a medical expense. However, there are a number of rules on how to qualify it as a medical expense.
To be eligible, it is important that the orthodontics were necessary. The visit must not be just for cosmetic purposes. Here are some tips that should help you with orthodontic medical deductions.
- Keep Records
Most people think that the medical deductions they get by qualifying orthodontics as a medical expense are not worth it. However, it is mostly because they are not getting the complete picture. A mistake could lead to costly taxation.
In fact, medical expenses, in general, are listed as one of the most underutilized ways to get tax deductions. The tax credit could apply to any procedure, provided the patient keeps good records. If you are not making calculations, you will never know.
Keeping receipts is not an easy job. It is quite difficult to do unless you are making a conscious effort to store everything safely. One thing to remember is that the expenses are not just covered for the calendar year but the tax year.
Thus, any expense that dates back twelve months to the date of you filing your tax returns is qualified as a deduction. However, keep in mind that the same period applies to your dependents. If keeping receipts is difficult, contact your orthodontist.
At times, the office may give you a complete receipt for the whole year. If you are lucky, they may also have one from a year back. It is especially important for filing accurately for the tax year.
- Low-Income Earners Should Conduct Research
For low-income earners that are working, there are some refundable tax credits offered. In most cases, they vary from state to state. It is important to find out how it works in your particular state. The tax credits apply if the person also has other high medical expenses.
Additionally, if you are studying or disabled, you qualify for these credits. They are designed to assist you in continuing working or going to school. However, there is a caveat to claiming these credits. For one, the state or federal law applies a certain minimum amount.
- Check the Adjust Gross Income
The AGI can have a huge impact on the credits and deductions that you get. Thus, the result is that it reduces your taxable income amount. It is an often-ignored aspect when filing tax returns. In fact, you probably pay most attention to taxable incomethan the AGI.
Next time you are filing returns, you should pay more attention to your AGI. It has a direct impact on the credit and deductions for which you are eligible. It can significantly reduce the amount of taxable income you report.
Orthodontic expenses are deductible. However, combined with other medical expenses, they must exceed 10% of your adjusted gross income. In short, you should start by calculating all the medical expenses. Then, continue to calculate 10% of your AGI.
It is the reason why it is important to keep accurate records. Even a difference of 0.01% makes you ineligible.
As of now, there are provisions for people who are 65 years or older. For them, their threshold is 7.5%. However, that figure will expire unless new legislation is created to lower it again. Additionally, people married to someone whose age is 65 or more will retain the threshold at 7.5%.
- Keep the Transportation Rules in Mind
The cost of going to and from the orthodontist is deductible. However, keep in mind that the transportation must be primarily for seeing the orthodontist.
The transportation costs recognized as deductible are:
- Taxi, train, bus, plane fare, or ambulance transportation
- Transportation expenses incurred by a parent when they travel with their child to the orthodontist’s office
- Transportation costs for any medical personnel that have to come to where the patient is.
If you go by car, simply deduct the standard mileage rate. The rate is set at 24 cents per mile. However, this figure may change with time. Check at what level it is when you are filing tax returns. Parking fees and road tolls are inclusive of the cost.
- Prepay or Delay Payments
An effective strategy can help you get over the 10% AGI threshold. If you have already reached the 10% threshold for this year, you can prepay those for the next year.
The same applies when you delay payments. For instance, you know that you will not hit the 10% threshold next year for total expenses. Delay making payments to your orthodontist and pay next year to ensure you get to the threshold.
All of these tips are designed to help you reduce the amount of tax you owe. Keep them in mind to help you make the most of your visits to the doctor.