If you will be deducting medical expenses this year, you may want to take a look at the new rules for deducting medical and dental expenses. The six things that affect your deductions this year are:
1. Increase in the AGI threshold: From 2013, the amount of allowable medical expenses you must exceed before you can claim a deduction is 10% of your adjusted gross income (AGI). Previously, the threshold was 7.5 percent of AGI.
2. Temporary exception for age 65: The AGI threshold remains at 7.5% of your AGI if you or your spouse is age 65 or older. This exception will remain until Dec. 31, 2016.
3. Itemize deductions: You can only claim your medical and dental expenses if you itemize deductions.
4. Expenses that qualify: You can include most medical or dental costs that you paid for yourself, your spouse and your dependents. Check the exceptions and special rules. You can include the cost of diagnosing, treating, easing or preventing disease. The cost of prescription drugs and insulin also qualify.
The cost of insurance premiums that you pay for policies that cover medical care qualifies, as does the cost of some long-term care insurance.
5. Travel costs qualify: You may be able to claim the cost of travel for medical care, including the cost of public transportation, ambulance service, and tolls and parking fees. If you use your car, you can deduct either the actual costs or the standard mileage rate for medical travel. The rate is 24 cents per mile for 2013.
6. No double benefit: You can’t claim a tax deduction for medical and dental expenses you paid with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from those plans are usually tax-free.