The cost of medical and dental care is typically the largest expense for older Americans. Fortunately, some of these bills may be tax-deductible.
The 2016 tax year could be the last time adults age 65 and older can take advantage of a lower threshold for deducting a portion of your medical and dental expenses.
If you itemize your deductions on Schedule A of your tax return, among the categories to list are medical and dental expenses. However, they are subject to a limit.
For many years, the limit was 7.5 percent of a taxpayer’s adjusted gross income, meaning that only those medical expenses in excess of 7.5 percent of a taxpayer’s AGI were deductible. For example, if someone’s AGI was $40,000, only those medical and dental expenses that exceeded $3,000 (7.5 percent times $40,000 equal $3,000) would be deductible.
But the rules for deducting medical and dental expenses changed in 2013, increasing that threshold to 10 percent of AGI.
Seniors got a brief reprieve as Congress exempted people age 65 and older from the 10 percent threshold until 2017.