 Income tax 2021-2022. Medical and dental expenses. Get ready to get refunds to the max. Dive into Income Tax 2021-2022. Most of this information can be found in the Schedule A Instructions for Tax Year 2021 found at the IRS website irs.gov irs.gov. Here's the tax formula focused in on the itemized deductions and prior presentations. We looked at the income line, the adjustments to income, which you could think about as the above the line deductions schedule when deductions or deductions for AGI adjusted gross income to get to adjusted gross income, keeping the above the line deductions separate in our mind from the deductions we're focusing in on here. The itemized deductions, itemized deductions only being taken if they're greater than the standard deduction. The standard deduction being dependent upon our filing status in general. So here's the first page of the Form 1040. We're looking at line number 12. The left-hand side has the standard deduction amounts, the normal standard deductions, if there's no added circumstances to them. And we would need the itemized deductions to be greater than those amounts per filing status in order for us to be benefiting to take the itemized deductions. And therefore, when we're planning, we've got to be thinking, is it worthwhile to gather up the itemized deduction information? It would only be so if it's going to benefit us if they're going to be greater than the standard deduction. So here's the itemized deductions on the schedule A, which are broken out by the categories on the left-hand side, which we're going to dive into now, starting with the medical and dental expenses, and the schedule A total, if greater than the standard deduction will flow into line 12A, line 12A here. So note that when we're thinking about the medical and dental expenses in general, we also have another kind of cap or kind of income restriction that we have to deal with. Now the general rule with the medical and dental expenses is, of course, we gather up our medical and dental expenses and see if we get a benefit from them, whether or not we get a benefit is a little bit more tricky than some of the other itemized deductions because we have this added level of complexity. So in other words, like with all itemized deductions, will it be worthwhile for us to gather up the medical and dental expenses? Only if our itemized deductions are going to be greater than the standard deduction, that means all itemized deduction categories added together. But we also have this added floor on the medical and dental expenses, and you can see it expressed here where it says enter amount from line 1040, line 11, which is the adjusted gross income. Notice that you're picking up the AGI adjusted gross income, not the income line. That's typically the case when you have phase out or floor types of calculations times 7.5%. So in essence, you're going to need medical and dental that's greater than the floor of 7.5% of your AGI. So the funny thing about this is that if you're talking about whether or not someone can benefit from medical and dental, typically you have someone that's going to itemize, that's usually higher income individuals. And usually the thing that pushes people over is a substantial amount of mortgage interest and property taxes and state taxes, for example. But if their income is too high, it's less likely that they're going to get the medical and dental even though they're itemizing, because they're going to have that 7.5% of their income AGI income floor will be fairly high as well. So it's kind of like that in between zone as to whether you're going to be benefiting from the medical and dental. If you're not itemizing, you might not, it might not be worthwhile to pull together the medical and dental because you're not going to be able to take it. And if your income is too high, then it still might not be worthwhile to pull together the medical and dental because you're not going to have enough to clear the floor to benefit the floor of 7.5% of the AGI. So remember when we think about the standard deduction and the itemized deductions, you want to keep in mind the standard deduction in general. So if it was single, 12, 5, 50, double that for married, head of household in the middle, 18, 800. And then if they're over a certain age and or blind, you could have also other variations based on the added components that could be in charge as well. So you got to keep those in mind when you're giving people advice as to whether they give you the medical and dental or if you got a shoebox full of stuff, do you need to add up the medical and dental? Well, it depends on whether or not it's going to be beneficial to do so. So medical and dental, you can deduct only the part of your medical and dental expenses that it sees 7.5% of the amount of your adjusted gross income on form 1040 or form 1040 SR 11. So you've got that added level of a floor that we're talking about. If you received a distribution from a health savings account or a medical savings account in 2021, you could see publication 969 to figure your deduction. Deceased taxpayers, certain medical expenses paid out of deceased taxpayers estate can be claimed on deceased taxpayers final return. You could see publication 502 for details. So it can get a little bit confusing taking some of these deductions in that circumstances. So you can look at the publication 502 for details. They're found on the IRS website. More information, publication 502 discusses the types of expenses you can and can't deduct. It also explains when you can deduct capital expenses and special care expenses for disabled persons. So when you get into the area of medical and dental, you can get into a lot of kind of gray areas with it. Does something qualify as medical and dental type of expenses or not? And and some of the times the code will will or at least the regulations in the public publications may address that fairly specifically. And sometimes it doesn't. You might actually have to go to if you have an unusual case to like court cases or something like that to see if you can find some precedent to justify your position on those types of issues as well. So and there's a lot of there's actually a lot of kind of court cases. You can imagine unusual circumstances like the most the common example I was like you can imagine a lot of unusual situations. For example, someone saying I want to deduct my medical whirlpool and you're like, well, wait a second, you mean your jacuzzi and they're like, no, it's my medical whirlpool. My doctor recommended a whirlpool for my particular medical condition. And maybe that maybe it is a particular medical condition and so on and so forth. But it looks kind of like a jacuzzi, but it's a medical whirlpool. So you can you can imagine a lot of different things where doctor to recommend things that are fairly a large dollar amount of things and and and then have some question asked you whether it's a medical item or not. And that's where a lot of gray area comes in. And you could you could take a look at the code and if the code doesn't say it possibly court cases and so on and so forth. But for the standard kind of stuff, it's fairly straightforward that you would think would met be medical related items. So insurance premiums for medical and dental care, including premiums for qualified long term care insurance contracts as defined in publication 502 C limit on long term care premiums you can deduct later reduce the insurance premiums by any self employed health insurance deduction you claim on schedule one form 1040 line 17. So in other words, you can't really get two benefits from from the premium. So if you've got a benefit for it because you're self employed, we talked about that in a prior presentation and you got the benefit of a deduction there, then you can't like double up. There's no double dip it on the deductions. You can't deduct insurance premiums paid by making a pre tax deduction to your employee compensation because these amounts are already being excluded from your income by not being included in box one of forms W2. So if it's if it's basically being done through your work, then the work should be handling it by taking it out of box one of the W2 and therefore you're already getting kind of the deduction by basically a lowering of the income in that instance. If you are a retired public safety officer, you can't deduct any premiums you paid to the extent they were paid for for with a tax free distribution from your retirement plan. Then we've got the prescription medicines and insulin as possible deductible items. Then we have the prescription medicines or insulin possibly being deductible. We have the acupuncturists, chiropractors, dentists, eye doctors, medical doctors, occupational therapists, osteopathic doctors, physical therapists, pediatrists, psychiatrists, psychoanalysis for medical care only and psychologists. So we've got a lot of information there. Notice that some of the stuff that used to be thought of was more kind of on the fringe in terms of medical care that possibly is more likely to be something that could be included like say the acupuncturists and the chiropractors for example at one time were a little bit more outside of kind of the mainstream so it's a bit more inclusive in some ways in terms of the deductibility. Medical examinations, x-rays, laboratory services, insulin treatments and doctor-ordered so doctor and so notice what we have here your doctor-ordered items that's where you can get into some weird types of areas. My doctor ordered me to you know do this exotic type of thing that seems kind of like it would be a fun thing or beneficial thing possibly beyond the medical the medical recommendation and so on and so forth and so you can imagine a lot of gray area in that kind of area. Diagnostic tests such as full body scan, pregnancy test or blood sugar test kit. Then we have the nursing help including your share of the employment taxes paid. If you paid someone to do both nursing and housework you can deduct only the cost of the nursing help so the nursing help hospital care included meals and lodging, clinic costs and lab fees, qualified long-term care services. You can see publication 502 for more detail there. The supplemental part of the Medicare insurance, Medicare Part B. We also have examples of medical and dental payments. You can deduct the premiums you pay for Medicare Part D insurance, a program to stop smoking or for prescription medicines to alleviate nicotine withdrawal. That's another one that's a little bit you know you would have thought that maybe that would be a kind of on the fringe whether you would have that accepted or not because it's kind of like a behavioral type of thing because if you accept something like that you would think well maybe dieting you know it's going to be on there and if dieting is on there maybe I can deduct food you know or certain types of food. I bought a nice nice you know dietary piece of fish or something like that I should be able to deduct it and so you can see where these you know I could quickly get a little out of control here in terms of what is deductible or not. A weight loss program as treatment for a specialized disease including obesity diagnosed by a doctor and so kind of the obesity is another item where it has been classified as a disease where you could see where it's kind of confusing as to when someone is basically overweight and when they are obese and the thing that's kind of you know not good about sometimes when they're trying to help with the tax code is they actually give incentives when someone is classified under the disease which you would think would could incentivize people to want to be classified you know under a disease because you're giving tax incentives for them to be under the classification of the disease when in any case but this is where it gets kind of confusing on the on the medical and the policies and whether or not they're going to be good or bad. Medical treatment as a center for drug or alcohol addiction. Medical aids such as eyeglasses contact lenses hearing aids braces crutches wheelchairs and guide dogs including the cost of maintaining them. So this is another kind of area medical aids where you can where you could see there could imagine gray area as well because once again you could say well my doctor recommended this particular kind of medical aid and whatnot and then there's kind of some question as to whether it be a completely medical related or not where you could dive into more some more precedence and some of these kind of things of course you can imagine them getting quite expensive. So examples of medical and dental payments you can deduct surgery to improve defective vision such as laser eye surgery or radio keratatin.