10% is the new 7.5% in 2013
10 % is the new 7.5% beginning in 2013. What is this new 10% and what was the 7.5%? I am referring to the new limits on medical expenses you can deduct on Schedule A of the tax return. Under the new healthcare act that the U.S. Supreme Court upheld, that is better known as Obamacare, the amount of healthcare expenses that you can deduct on your tax return is 10% of AGI (adjusted gross income) beginning in 2013.
With the new threshold on the AGI limit, you will need to spend more on Medical Care in order to deduct the expenses on your tax return. Under the previous law, if you made $100,000, you had to have more than $7,500 in medical expenses before you were able to deduct your medical expenses on the tax return. Under the new rules beginning in 2013, the same $100,000 adjusted gross income examples means that you will need to spend more than $10,000 in medical care expenses before being able to deduct the expenses on your tax return. Of course, your total Schedule A deductions should be more than the standard deduction for married, married filing single, and single unless you like paying more in taxes.
So save your medical care receipts and add them up at the year. to determine if your medical expenses are greater than 7.5% of your AGI in 2012 and 10% in 2013. Some people will consider moving a major medical expense to 2012 instead of 2012 if it means getting a higher itemized deduction in 2012 vs 2013.
So will the new 10% medical care limitation for the Schedule A deduction affect you more than the current 7.5%?
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