Medical Expenses

AN ANALYSIS OF THE TAX CUTS AND JOBS ACT

January 2018

 

AN ANALYSIS OF THE TAX CUTS AND JOBS ACT

On December 22, 2017, after much, well-publicized legislative skirmishes, President Donald Trump signed into law H.R. 1, otherwise known as the “Tax Cuts and Jobs Act.”   Provisions affecting individuals are generally effective beginning December 31, 2017 and expire on December 31, 2025.  Most business-related provisions are permanent and are effective beginning December 31, 2017.

This new law is, by all accounts, the most significant revisions to the U.S. tax code since 1986, affecting almost all individual and business taxpayers.   Our firm’s general assessment of the new law will therefore be a two-part series: this first part covers changes to individual taxpayers, and the second part will cover changes to business taxpayers.

IRS Announces 2017 Standard Mileage Rates for Business, Medical and Moving

Taxpayers should know the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. The standard mileage rate for business is based on an annual study of both fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based solely on the variable costs.

While the 2017 business mileage rate decreased half a cent per mile from 2016, the medical and moving expense rates each dropped 2 cents per mile. Set by statute, the charitable rate remains unchanged. Effective Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) is:

Tax Benefits of Supporting Your Parents

Did you know you could be responsible for your parents’ unpaid bills? Ever heard of Filial Responsibility Laws?  Well, these are laws obligating you to provide financial support for your indigent parents.  Yes, obligated under law.  According to the National Center for Policy Analysis, 21 states across the country (including states like Connecticut, New Jersey and Massachusetts) allow for a civil action to obtain financial support for indigent parents.   At least 12 states may impose criminal penalties on children who refuse to support their parents.  Though rarely enforced, these laws may be dusted off by states looking to save money on Medicaid bills.

Tax Benefits For Disabled Taxpayers

The tax professionals at the Thorgood Law Firm can help any taxpayer pinpoint all of the tax benefits that are applicable to his or her situation or status. The following are some of the tax benefits that may assist disabled taxpayers.

  1. Credit for the Elderly or Disabled: This credit is generally available to certain taxpayers who are sixty-five (65) and older as well as to certain disabled taxpayers who are younger than sixty-five (65) but are on permanent and total disability.

Top Tax Deductions for Seniors and Retirees

Here are some of the most important tax deductions for seniors and retirees. 

  1. Higher standard deduction.

Any taxpayer that is 65 and older by December 31 of the tax year is entitled to a higher standard deduction. Taxpayers may take the higher standard deduction if a spouse is age 65 or older and together they file a joint return. Also, the higher standard deduction may be taken if the taxpayer files a separate return and can claim an exemption for a spouse because the spouse had no gross income and can’t be claimed as a dependent by another taxpayer. 

Taxes And Medical Expenses

Taxpayers that itemize​ personal deductions instead of claiming the standard deduction may deduct qualifying medical expenses to the extent that such expenses exceed 10 percent of adjusted gross income (“AGI”). Taxpayers that are 65 years or older, or turned 65 during the tax year, may deduct unreimbursed medical care expenses that exceed 7.5% of AGI. This threshold amount remains at 7.5% of adjusted gross income for these taxpayers until Dec. 31, 2016. I.R.C. §213(f).

Tax Issues for new Widows and Widowers

It’s a traumatic experience to lose a spouse. While there is little that can be done to replace this physical and emotional loss, the Tax Code provides some relief for newly widowed taxpayers. Here is a summary of some of the tax breaks for the newly widowed:

Filing Status

Deductions And Long-Term Care Insurance

A long-term care insurance premium, or a part thereof, may be deductible from federal income taxes as a medical expense. Acknowledging that it can’t assume the primary role in paying for Americans’ long-term health care, the federal government offers tax incentives to encourage middle-aged and older taxpayers to assume responsibility for their future health care needs. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) included provisions for favorable tax treatment of Long-Term Care insurance (LTCi) contracts that meet statutory qualifications.

Deduction Thresholds And Bunching Expenses

All of us as taxpayers continually think we have a lot of expenses that we can itemize and deduct to help reduce our respective tax bills. But they come, they go, all for naught and no effect. The problem usually arises from the fact that our costs regularly fall just short of the required income thresholds for some categories of deductions. One solution is “bunching expenses,” which is a term used to describe incurring as many expenses as possible in a particular category during a particular tax year. Of course, doing this in one tax year will usually significantly diminish any chance of repeating it the following year.

Testimonials

Categories