Deduction for 2019 Medical Expenses

I like to think of the deduction for medical expenses as a “phantom” deduction.

Most taxpayers who itemize deductions on their annual income tax returns are aware that they can deduct their medical expenses.

However, not everybody understands the “floor” on the medical expense deduction – you can only deduct the amount of your medical expenses that exceed 7.5% of your “adjusted gross” income.

Because of the 7.5% floor, most taxpayers who itemize deductions are unable to deduct any of their medical expenses.

Taxpayers not having both a low income and high medical expenses, rarely qualify for the medical expense deduction.

The bad news is that the Tax Cuts and Jobs Act increased the floor from 7.5% to 10% beginning in 2019.

The good news is that congress changed the law when they passed the year-end government funding law in December 2019.

Under the new law, the threshold remains at 7.5% of adjusted gross income for 2019 and 2020.

So the government gives us a deduction on one hand, but then takes it away with the other, by imposing the 7.5% floor. That’s why I categorize this as a “phantom” deduction.

It’s hard to keep track of all this arcane trivia.

– Mark S Gleason CPA

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