On occasion, clients will have certain medical expenses that seem obscure on the surface, but are in fact tax-deductible. Some of these deductions might surprise you, but they may also apply to you and your unique circumstances. They include:
Keep in mind that this is not an exhaustive list and all of these deductions are restrictive to certain circumstances. Even if you believe you are eligible for one or more of these deductions, it’s important to consult with me so we can determine whether they apply to you and your particular situation.
An HSA works like a savings account into which you deposit money on a tax-deductible basis for medical expenses. HSAs enable you to pay for current health expenses and save for future qualified medical and retiree health expenses on a tax-free basis. Once you reach 65, you can start using your HSA funds to pay for Medicare and other health care coverage.
At this time, you can continue to take tax-free distributions from your HSA for qualified medical expenses.
Nonqualified distributions will be taxable, but not subject to the 20% penalty. Once you enroll in Medicare, you can receive distributions to pay Medicare premiums, deductibles, co-pays and coinsurance under any part of Medicare, but you are no longer eligible to make contributions to your HSA.
If you have retiree health benefits through your former employer, you can also use your account to pay for your share of retiree medical insurance premiums. However, you cannot use your account to purchase Medicare supplemental insurance, such as a Medigap policy.
This topic can get tricky, so if you have any concerns, please give me a call so I can answer your questions.
New highway law changes due dates
On July 31, 2015, President Obama signed into law the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (Highway Act), which includes a provision regarding transfers of excess pension assets to retiree health accounts. Though the bill doesn’t have much to do with taxes, it has impacted the 2016 and subsequent tax year filing deadlines for partnership, S corporation and C corporation returns.
The new deadlines are as follows:
The time period for extensions has also been changed for tax years beginning after December 31, 2015. They are: