How to Calculate the Tax Deductible Medical Expenses
Keep in mind, the first criteria in sorting out medical expense receipts are the dates they were incurred. They should be for the tax year for which these preparations are being made.
Based on the list of allowed tax deductible medical expenses, perform the following:
(1) Make a schedule by listing the date, the receipt number, the nature of the expense and the amount.
(2) Get the sum of all the expense amounts you have listed in the schedule. Double-check the dates and the nature of the expenses.
(3) Deduct any insurance reimbursements received in connection with the medical expenses incurred during the year.
(4) Enter the total net medical expenses on line 1 of Schedule A, Form 1040A.
(5) Fill line 38 with your Adjusted Gross Income or AGI amount.
(6) Multiply the AGI by 7.5% or .075 and enter the result on line 3.
(7) Compare the total medical expenses on Line 1 and the 7.5% threshold limit of the AGI on Line 3; if Line 3 is greater than Line 1, enter zero (0) as the result for line 4
(8) If the amount on Line 1 is greater than the amount on Line 3, simply extract the difference between the two amounts. The resulting figure will be the amount of your medical and dental deduction. Hence, if you have more medical expenses allowable as deductions for your ITR than you were aware of; work along the rules so you can increase your tax deductibles.
There are other more complex scenarios or conditions involving medical and dental expenses. Knowing the allowable tax deductions comes in useful when filing income tax return under itemized deduction method.
The guide to tax deductible medical expenses presented here is only brief and basic since they are subject to future changes in the 2010 IRS Publication. However, the methodology in determining your deductible amount will be basically the same.