Over the years, the deductibility of medical and miscellaneous deductions
on Federal Schedule A has seemed to vanish, despite your diligence in saving
all those receipts. Medical deductions are still permitted by the IRS
and include your unreimbursed expenses for insurance, prescriptions, doctors,
dentists and long-term care premiums. The list of allowable deductions is
long and varied, so be sure to call the office if you have specific questions
about your medical expenses. The IRS requires a reduction of those expenses
by an amount equal to 7.5% of your adjusted gross income.
In many cases, the 7.5% downward adjustment eliminates the medical deduction
from the tax return. So saving the receipts from the drug store and having
all the cancelled checks from the doctor and eyeglasses may not result in
a tax savings deduction on your federal return.
Another category of deductions that has a downward adjustment based on your
AGI is the miscellaneous deductions reported in the lower section of Schedule
A. These deductions includes (but are not limited to): unreimbursed employee
business expenses, including travel and entertainment; professional books
and journals and home-office deductions; IRA fees; job-hunting expenses; job-related
education expenses; professional and union dues; work clothes and uniform
expense; safe deposit box rental fees; and the cost of income tax preparation.
The total of all of these expenses must be reduced by 2% of your AGI, with
the net amount available as a deduction.
Once again, it is possible that the AGI downward adjustment can reduce your
deductions to zero. So when you review your tax return and notice your medical
and miscellaneous deductions aren't exactly the amounts you reported to the
other when your return was prepared, it's because the IRS has restricted their
deductibility.
