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Make money this flu season

Lionshare Partners > Blog > Make money this flu season

One of the benefits of the newly signed tax-reform law is the temporary reduction in the medical expense deduction floor. The floor, which was scheduled to be 10% of adjusted gross income in 2017, will now be 7.5% for 2017 and 2018 (returns to 10% in 2019). So, each dollar spent on health care beyond the 7.5% threshold is discounted at your personal tax rate and reduces your tax burden. For example, Joe Sixpack’s adjusted gross income (AGI) in 2018 is $60k. As such, he will be able to deduct qualified health expenses over $4,500. This is important as high-price health-care premiums become the norm.

Don’t expect your tax advisor or turbo tax to go through the thorough list of qualified medical & dental expenses. “Mr. Client, how much did you spend on Birth Control Pills?” Take a month to look at the IRS Publication 502 (https://www.irs.gov/publications/p502) if you expect to have significant medical expenses this year or incurred them last year.

I find it helpful to think in terms of monthly thresholds. Let’s go back to Joe Sixpack — the monthly floor he has to exceed in order to deduct is $375 ($4,500/12). So, if his medical & dental expenses are more than $375/month, he should automatically be thinking about this deduction.