Medical Deduction Income Restrictions

Taxpayers can only deduct medical expenses if they itemize their deductions. Beginning in 2013, medical expenses are only deductible if they exceed 10% (was 7.5% in prior years) of a taxpayer's income (AGI), and then only the amount that exceeds that income limit is actually deductible. For seniors (age 65 or older and their spouses) the limitation remains at 7.5% through 2016. The table below reflects the AGI limitation for various years:

	2012 & Before	2013 - 2016	After '16
Individuals under the age of 65	7.5%	10%	10%
Individuals (and their spouses) age 65 before close of year	7.5%	7.5%	10%
Alterative Minimum Tax Threshold	10%	10%	10%

Senior Planning Strategy – Pay Discretionary Medical Expenses Before 2017 Taxpayers age 65 before the close of the year and their spouses with potential discretionary medical expenses, such as orthodontist or dental work, vision care, etc., should consider having work done and paid for before 2017. But note that the costs of surgery purely for cosmetic reasons aren't qualified medical expenses.

Once a taxpayer's expenses exceed the income limits, every additional dollar spent on medical for the year becomes deductible. Therefore, once the minimum is met, it is important to utilize every legal expense. In addition, if you only marginally qualify for medical each year, it may be appropriate, when possible, to “bunch” medical deductions in one year to maximize the benefit.

Taxpayers whose medical expenses do exceed the income limitation should also make sure they do not overlook any deductible medical expense.

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