If you’ve had to shell out thousands of dollars for dental work recently, you’re probably wondering if you can write it off. Major dental work in Hayward, CA can add up quickly, and most dental plans are insufficient when you need a series of visits. Since the IRS considers dental costs a medical expense, many clients assume they can write it all off. However, there are specific rules you must follow to deduct a portion of your dental work. Here’s how it works.
The IRS and dental expenses
To deduct medical and dental expenses, you’ll need to file an itemized tax return. Only unreimbursed expenses count—that is, what your insurance won’t pay for—and only those above 7.5 percent of your adjusted gross income. Anything reimbursed or below 7.5 percent of your AGI is not deductible.
Please note that thanks to the Tax Cuts and Jobs Act (TCJA) of 2017, the standard deduction is $12,400 for single filers and $24,800 for married couples filing jointly. If your total deductions do not exceed the standard deduction, it’s a better idea to take the standard deduction. A good accountant can help you decide which is a better approach.
Keep in mind that medical and dental expenses are classified together—you won’t find a separate “dental expenses” line item on your tax forms. You can include hospital stays, surgery, oral surgery, x-rays, medications, braces, extractions and artificial teeth in your deductions. You may not deduct non-prescription medications or anything reimbursed by a health plan or flexible spending account.
If you think you’ll have a lot of medical or dental expenses coming up in the near future, consider setting up a health savings account. This is a tax-advantaged account—you can use pre-tax income to fund the account. In turn, this allows you to pay for any unreimbursed medical expenses straight from the account. You can deduct contributions to your HSA up to the amount of your deductible or the IRS limit, whichever is less. Unused funds are rolled over to the next year, and if you withdraw money to pay medical expenses, it cannot be taxed.
Talk to an accountant
Tax law is constantly changing, which makes it difficult for laypeople to keep up with the changes. Working with an accountant is the smartest way to ensure you’ve maximized your deductions and made the smartest tax-related decisions possible. A good accountant will review your income and expenses and figure out how to get the most bang for your buck—and can also make suggestions as to how to minimize your tax liability in the future. If you’re serious about saving money and setting yourself up for a comfortable financial future, working with an accountant is one of the best steps you can take.
When you have questions about writing off dental work or medical expenses in Hayward, CA, let the team at Menjivar & Company CPAs, Inc. help. Our tax experts are standing by—call today to schedule an appointment!
Categorised in: Tax Preparation