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Tax: Medical Expense Deductions

How Much Can I Deduct?

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You can only deduct those medical and dental expenses which, added together for the tax year for which you are filing, the required threshhold of your Adjusted Gross Income.

If your adjusted gross income is recalculated -- because of an audit or amended return, for example -- you will need to recalculate the amount of deduction available. If your income goes up, the deduction goes down.

Example: Richard, age 67, initially calculated his Adjusted Gross Income at $50,000 and had medical expenses of $15,000 related to a soccer injury. His medical expenses exceeded 7.5% of his AGI by $11,250 and therefore were potentially deductible. After an IRS audit, his Adjusted Gross Income was recomputed and now totals $65,000. Because his medical expenses are a smaller percentage of $65,000 than of $50,000, the expenses now exceed 7.5% of his AGI by a smaller amount. The amount he is potentially able to deduct is reduced to $10,250 ($15,000 -- 7.5% of $65,000).

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