Claiming a Tax Deduction for Medical and Dental Expenses
IRS Tax Tip 2015-31, March 4, 2015
Your medical expenses may save you money at tax time, but a few key rules apply. Here are some tax tips to help you determine if you can claim a tax deduction:
- You must itemize. You can only claim your medical expenses that you paid for in 2014 if you itemize deductions on your federal tax return. If you take the standard deduction, you can’t claim these expenses.
- AGI threshold. You include all the qualified medical costs that you paid for during the year. However, you can only deduct the amount that is more than 10 percent of your adjusted gross income.
- Temporary threshold for age 65. If you or your spouse is age 65 or older, the AGI threshold is 7.5 percent of your AGI. This exception applies through Dec. 31, 2016.
- Costs to include. You can include most medical and dental costs that you paid for yourself, your spouse and your dependents. Exceptions and special rules apply. Costs reimbursed by insurance or other sources do not qualify for a deduction.
- Expenses that qualify. You can include the costs of diagnosing, treating, easing or preventing disease. The costs you pay for prescription drugs and insulin qualify. The costs you pay for insurance premiums for policies that cover medical care qualify. Some long-term care insurance costs also qualify. For more examples of costs you can and can’t deduct, see IRS Publication 502, Medical and Dental Expenses. You can get it on IRS.gov/forms anytime.
- Travel costs count. You may be able to claim travel costs you pay for medical care. This includes costs such as public transportation, ambulance service, 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 23.5 cents per mile for 2014.
- No double benefit. You can’t claim a tax deduction for medical expenses you paid for with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from those plans are usually tax-free. This rule prevents two tax benefits for the same expense.
- Use the tool. You can use the Interactive Tax Assistant tool on IRS.gov to see if you can deduct your medical expenses. The tool can answer many of your questions on a wide range of tax topics.
Last year we told you there had been a record number (8,126) of FLSA cases filed between April 1, 2013 and March 31, 2014. This was a 5% increase over the prior year, and the seventh straight year of increases; in fact the number of cases filed has risen 438% since the year 2000. Even more astonishing is that these numbers only represent the federal cases, and are not including the ones filed within the individual state courts.
On March 13th, 2014 the White House, Office of the Press Secretary released the Fact Sheet: Opportunity for All: Rewarding Hard Work by Strengthening Overtime Protections. As an excerpt from the fact sheet states, “The overtime and minimum wage rules are set in the Fair Labor Standards Act, originally passed by Congress in 1938, and apply broadly to private-sector workers. However, there are some exceptions to these rules, which the Department of Labor has the authority to define through regulation. One of the most commonly used exemptions is for “executive, administrative and professional” employees, the so-called “white collar” exemption.” A Presidential Memorandum has been signed instructing the Secretary of Labor to update regulations regarding who qualifies for overtime protection. By possibly changing the rules as to who qualifies as exempt vs. non-exempt from overtime, in what may be a new form of “duties test”, as well as the possibility of the income threshold for salary being raised; many employers are sure to have questions, and many more employers are sure to be exposed to further FLSA cases.
A draft of the new regulations was originally promised for November of 2014, but has been continually pushed back. That does not mean they won’t happen; in fact Secretary Perez has stated that they will be released this “sometime this spring.” Though the draft of the new regulations has not been released, it is always a good time for employers to review how they currently classify employees, as the main changes expected are to be in the form of a new “duties” test for salaried employees. Employers should also be prepared for the way the changes will affect their overtime wages paid. Changes to a base salary requirement (many think it will at least double from the current $455 per week) along with the duties test are sure to have more employees classified as non-exempt for overtime, and therefore employers should be prepared for more wages paid out to employees in the form of overtime wages.
As always HR Strategies can help you reduce your risk and vulnerabilities to a FLSA regulations lawsuit, along with the many other Federal, State, Local and Professional Regulatory changes. Call us today to relieve your stress of whether or not you are in compliance; and give yourself the ability to focus on the aspects of your company for which you went into business, while we handle the behind the scenes issue of compliance.
Give us a call today! 770-339-0000
Six Tips You Should Know about Employee Business Expenses
IRS Tax Tip 2015-45, March 24, 2015
If you paid for work-related expenses out of your own pocket, you may be able to deduct those costs. In most cases, you claim allowable expenses on Schedule A, Itemized Deductions. Here are six tax tips that you should know about this deduction.
- Ordinary and Necessary. You can only deduct unreimbursed expenses that are ordinary and necessary to your work as an employee. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is appropriate and helpful to your business.
- Expense Examples. Some costs that you may be able to deduct include:
- Required work clothes or uniforms that are not appropriate for everyday use.
- Supplies and tools you use on the job.
- Business use of your car.
- Business meals and entertainment.
- Business travel away from home.
- Business use of your home.
- Work-related education.
- This list is not all-inclusive. Special rules apply if your employer reimbursed you for your expenses. To learn more, check out Publication 529, Miscellaneous Deductions. You should also refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses.
- Forms to Use. In most cases you report your expenses on Form 2106 or Form 2106-EZ. After you figure your allowable expenses, you then list the total on Schedule A as a miscellaneous deduction. You can deduct the amount that is more than two percent of your adjusted gross income.
- Educator Expenses. If you are a K through 12 teacher or educator, you may be able to deduct up to $250 of certain expenses you paid for in 2014. These may include books, supplies, equipment, and other materials used in the classroom. You claim this deduction as an adjustment on your tax return, rather than as an itemized deduction. This deduction had expired at the end of 2013. A recent tax law extended it for one year, through Dec. 31, 2014. For more on this topic see Publication 529.
- Keep Records. You must keep records to prove the expenses you deduct. For what records to keep, see Publication 17, Your Federal Income Tax.
- IRS Free File. Most people qualify to use free, brand-name software to prepare and e-file their federal tax returns. IRS Free File is the easiest way to file. These rules can be complex, and Free File software will help you determine if you can deduct your expenses. It will do the math, fill out the forms and e-file your return – all for free. Check your other e-file options if you can’t use Free File.
Today is National Walk to Work Day. As the number of employee wellness programs continue to soar in the US business world, this holiday seems the perfect fit! According to an article updated on 6/7/14, on About.com, “If your commute is too long, [as many of ours here in Metro-Atlanta are] make it a Walk to Lunch Day. Invite your co-workers to join with you for Walk to Work Day, or join you in a Walk to Lunch.”
Did you know….“Walking for 30-60 minutes a day greatly reduces your risk of dying from heart disease, cancer, stroke, and diabetes” By finding a way to make walking part of each day, you are giving yourself proven health benefits far beyond any promised by herbs, vitamins, or prescription drugs. Walking for 30 minutes a day as part of your work commute or lunch puts you into the “Moderate Physical Activity” category and greatly lowers your health risks.”
Even though today is April Fool’s Day, it is definitely not recommended to participate in this holiday by having fun at work pulling April fools pranks. However, if you just can’t resist, here are two very important guidelines for April Fools at work:
- Know your company culture. You know your place of business, and the type of culture there. Think long and hard about whether or not pranks will be welcomed, or if you are just asking for disciplinary action by partaking in them.
- Embarrassment is never good, nor is disruption of business. Consider others and their workloads before partaking in any prank. And of course, you never want to break any policies and/or laws regarding bullying, harassment, discrimination, etc.
While you may have the best of intentions for just having a laugh at work, it may be best to leave the April Fools pranks on the playground, or at least outside of the office with your family and friends. Here are some great ideas for doing so: April Fools!