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Medical and dental deductions got you confused?
Tip of the Month
February 2003
Medical and dental deductions got you confused?
Hereâs the skinny...
Your individual medical deductions are based on the year they are paid, not the year you received the treatment. Therefore, those medical bills from 2002 are deductible on your tax return only if that is the year in which you paid them.
You could even deduct on your 2002 taxes any medical bills for services to be rendered in 2003 as long as you paid the bills last year. For example, suppose you had some medical bills last year, but not quite enough to meet the 7.5 percent of income threshold the Internal Revenue Service says you must reach to deduct the costs. However, you planned on having some medical procedures done in early 2003. If you had arranged with your doctor to pre-bill you for the 2003 work, you can take advantage of the not-yet-completed medical procedures on your 2002 tax return.
The system is the same for dental expenses. In fact, you could encounter this tax situation more often with dental bills since insurance coverage is minimal in this area and therefore it's easier to get over the deduction threshold.
If you waited to pay any medical bills from 2002 in 2003, then you will need to wait until you file in 2004 to use them as a deduction. Remember, it's not when you get the medical treatment; it's when you pay for it.
Your individual medical deductions are based on the year they are paid, not the year you received the treatment. Therefore, those medical bills from 2002 are deductible on your tax return only if that is the year in which you paid them.
You could even deduct on your 2002 taxes any medical bills for services to be rendered in 2003 as long as you paid the bills last year. For example, suppose you had some medical bills last year, but not quite enough to meet the 7.5 percent of income threshold the Internal Revenue Service says you must reach to deduct the costs. However, you planned on having some medical procedures done in early 2003. If you had arranged with your doctor to pre-bill you for the 2003 work, you can take advantage of the not-yet-completed medical procedures on your 2002 tax return.
The system is the same for dental expenses. In fact, you could encounter this tax situation more often with dental bills since insurance coverage is minimal in this area and therefore it's easier to get over the deduction threshold.
If you waited to pay any medical bills from 2002 in 2003, then you will need to wait until you file in 2004 to use them as a deduction. Remember, it's not when you get the medical treatment; it's when you pay for it.
These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.
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