Since the end of the year is just around the corner and because of the many changing tax regulations for the next couple of weeks we will be posting a series of tax tips and helpful information.
Increased Threshold for Deducting Medical and Dental Expenses
Medical and dental expenses are only deductible if they exceed a certain percentage of the taxpayer’s adjusted gross income for the year. For years before 2013, that percentage was 7.5 percent. For 2013 and later years, the percentage is 10 percent. However, for any tax year ending before January 1, 2017, the floor is 7.5 percent if the taxpayer or the taxpayer’s spouse has reached age 65 before the end of that year. If you have had significant medical expenses in 2013 you may want to consider taking care of elective procedures such as dental, vision, etc. as it is better to “bunch” medical deductions in a given year to have a better chance of having some of them tax deductible.
Last Year for State and Local Sales Tax Deduction
One provision scheduled to expire at the end of 2013 is the election to deduct state and local sales taxes in lieu of state and local income taxes. Thus, if you are thinking of purchasing a large ticket item that will generate a larger deduction than the state and local income tax deduction, purchasing the item in 2013 may be beneficial.
Deduction for Eligible Teacher Expenses
Another provision that expires this year is the deduction for eligible teacher expenses. For tax years beginning before 2014, eligible educators (i.e., teachers) can deduct from gross income up to $250 of qualified expenses they paid during the year. If spouses are filing jointly and both were eligible educators, the maximum deduction on the joint return is $500. However, neither spouse can deduct more than $250 of his or her qualified expenses.