I recently became aware of the fact that surgeries are tax deductible, though I'm not really sure how that works out?
I know you can claim it if it's over 10% of your income which mine was.

So how does it work, do I get back the difference between what I paid and 10% of my income?
For example, if I paid $7k for my surgery, and 10% of my income was $26k, would I get back $4400?

Not really sure how taxes and deductions work or anything like that.

Not sure of the specifics for surgery, but for deductions in general, let's say you made $20,000 that year, and your surgery cost $10,000. You have to itemize your deductions and let's say surgery plus other deductions came to a total of $11,000. $20,000 minus $11,000 is $9,000 and you would be taxed as if you only made $9,000. Personally, I would recommend using a tax professional this year.

Not sure how to figure it but I did deduct my top surgery (surgeon, hospital, etc.). I didn't deduct the travel and incidentals and not sure about that. I did get more back than usual. But I just did it and was surprised. LOL

--Jay

QuoteSo how does it work, do I get back the difference between what I paid and 10% of my income?
For example, if I paid $7k for my surgery, and 10% of my income was $26k, would I get back $4400?

Unfortunately, that's not the way tax deductions work. In general, what happens is that you deduct the allowed amount from the income you're reporting. (The amount varies according to the type of deduction -- there are complicated rules for this, which is what keeps professional tax preparers in business.) This lowers your taxable income, so you end up paying less in taxes and get more money back if you receive a refund.

Dee is right -- it would be good to get professional help with this.

On your Federal Form 1040, Schedule A, the top section is for medical and dental expenses.  You add up all you spent on allowable expenses, figure out what 10% of your AGI is, then you are able to deduct that portion of your medical expenses that exceeds the 10% figure.  Ideally, people who itemize deductions do so because it ends up being more than the standard allowed deduction.  This is usually for people who have some charitable contributions, own a home and thus pay mortgage interest and property taxes, as well as medical expenses.  It may or may not be to your advantage to itemize, since the standard deduction is somewhere around 6,200 dollars.  If you have deductions in addition to your medical expenses, you might want to consider it.  I am not a CPA or any qualified accountant by any means, but I have done my own taxes for 30 years.

I can't recall what it is but when I did this I had a CPA (a general tax person can do this but you do not, should not go to HR Block, they are very expensive) do this. You can do Turbo Tax but it may not be so easy. If medical bills are over a certain amount you are can itemize. And that's what you are doing. The local LBGT group may be able to refer you to somebody. They can also explain it to you, how this works.

Here's a little explanation that is in "English": http://www.bankrate.com/finance/money-guides/maximizing-your-medical-deductions-1.aspx


--Jay

Quote from: Tysilio on February 12, 2015, 11:21:51 AM
Unfortunately, that's not the way tax deductions work. In general, what happens is that you deduct the allowed amount from the income you're reporting. (The amount varies according to the type of deduction -- there are complicated rules for this, which is what keeps professional tax preparers in business.) This lowers your taxable income, so you end up paying less in taxes and get more money back if you receive a refund.

Dee is right -- it would be good to get professional help with this.

I will have to try this. My mom does my taxes and says medical is doctor, prescriptions, surgery, dental, chiropractor. Plus you can deduct for out of pocket school costs.

I added my medical expenses up and it was almost 10k, going to be interesting seeing how it plays out.

FYI, it has to be expenses that were paid in that year.

Lord Kat is correct. So expenses incurred in 2015 would be taken off income taxes which are due April 15 2016.

Also I think I recalled how this works. There is a standard medical deduction (already figured into your taxes) of between $3000-$5000 (not exactly sure). It is hard to go over that, but obviously top surgery would do it, esp combined with other medical bills. If you want to account for it though, you would have to itemize medical bills. In fact, you would need to itemize EVERYTHING. You'd really need a professional, as this is hard to do with Turbo Tax, though doable. Also a tax professional will help you with how to figure this all out.

--Jay

My point was it isn't expense incurred, it is expense that has been paid.

Quote from: LordKAT on February 14, 2015, 12:06:30 AM
My point was it isn't expense incurred, it is expense that has been paid.

Yes thats right too.

--Jay

When counting up what you paid, you can include insurance premiums and co pays.

If you have to travel for medical treatment, your transportation and lodging are also deductible, at least in part, assuming it's not treatment you can easily get locally. Meals aren't deductible, but you can also deduct lodging for someone traveling with you. (This all assumes that the purpose of travel is the medical treatment -- no fun and games along the way... )

The IRS has a little file about this deduction. It's what I used for my top surgery tax year, and I had no problems. You will be provided with a formula; you can deduct only expenses over a certain percentage of your income.

My ex and I made quite a bit of money all told, but itemizing turned out to be worthwhile because we deducted not only top surgery but therapy, dental expenses for him, a standardized travel allowance for everything, insurance copays and premiums, hormone expenses, and assorted other nonmedical expenses that would not have added up to anything if we hadn't already been over the itemization threshold.

Anyone in the U.S. who is in therapy and/or who is planning a surgery and who might be able to itemize should comb through tax info at the beginning of the year and then keep receipts for ANYTHING that is tax deductible during that year. You might be surprised to find out what is deductible.

I didn't take the deduction the year of my surgery (tax year 2013) because the IRS statement said that it was for surgeries that were the purpose of transitioning.  Since I wasn't taking T at the time and thought I would remain legally female, I didn't think it was ethical to take it.  Now I am medically transitioning (taking T and planning to become legally male).  Is it possible to go back and amend it?  Thanks.

I think that is a question for a tax prep person. You may have to show receipts as it would increase your likelyhood of an audit.

Quote from: LordKAT on February 15, 2015, 09:59:39 PM
I think that is a question for a tax prep person. You may have to show receipts as it would increase your likelyhood of an audit.

Thanks.

I have amended prior tax years, and I ran into no problems (and got lots of money back), but it's always good to consult with a pro.

Quote from: Arch on February 16, 2015, 12:33:42 AM
I have amended prior tax years, and I ran into no problems (and got lots of money back), but it's always good to consult with a pro.

Thanks, Arch.