Some of us are gathering information for our tax returns for the tax year 2017. Here are three things to keep in mind before we hit “send” on that tax return due on April 17, 2018.
It is necessary to report whether you had health insurance or not.
Despite the repeal of the individual mandate through the Tax Cuts and Jobs Act signed into law in December, it is still required that you report whether or not that you had health insurance in 2017; this will still be required in 2018. Many people heard that the individual mandate was repealed, which is true, but the repeal is not yet effective. The IRS is very clear about the 2017 tax filing season in that it will reject returns that do not report full year coverage, or fail to claim a coverage exemption, or do not report the tax penalty. If you work in a place with 50 or more full time employees, your employer is required to report to the IRS that they complied with the ACA’s employer mandate and offered health insurance. There is a tax form, 1095-C, that your employer is required to give you but the deadline for providing this form has been extended to March 2. Nevertheless, you do not need the 1095-C to confirm your coverage on your individual tax return.
Do a Health Savings Account review.
An HSA account allows you to save money tax- free to spend on qualified medical expenses. Individual consumers can contribute up to $3,400.00 and families can contribute $6,750.00 in 2017. Haven’t met your contribution limit? You can still add funds for the 2017 tax year until April 15, 2018. If you are expecting medical expenses this year, this can be a good way to prepare. You will need to complete Form 8889 (obtained from your HSA administrator) to report your contributions and withdrawals. This is to verify that your withdrawals were for qualified medical expenses.
The medical expense deduction is expanded for two years.
The Tax Cuts and Jobs Act did expand the medical expense deduction to 7.5 percent for 2017 and 2018. In 2019, the deduction reverts back to its current rate of 10 percent. So, if your out-of-pocket medical bills exceeded 7.5 percent of your adjusted gross income, you can claim the deduction. Most people will not qualify for even the expanded medical expense deduction since healthcare premiums do not count toward this deduction and premiums are usually consumers’ biggest expense. However, some older persons might have sufficient medical expenses to take advantage of this deduction.
Please contact one of our elder law attorneys to learn more about how these deductions affect you.
This information has been reported in numerous news sources, including www.tennessean.com.
— Written by Kathleen M. Martin, Esq., CELA*
*Certified as an Elder Law Attorney by the National Elder Law Foundation as authorized by the Pennsylvania Supreme Court.