Reduce medical expenses for elderly in 2017
Another “sneaky” provision of the Affordable Care Act becomes effective Jan. 1, 2017. For older folks (age 65 and older), in 2017 and later years, medical expenses will be reduced as an itemized deduction by 10 percent of Adjusted Gross Income instead of only 7 percent.
Congress had made a special allowance for older folks by only reducing medical expenses by 7 percent for years 2013-2016. Younger folks have experienced the 10 percent reduction all the time.
This means you might consider whether or not to do those tests, procedures, dental work, eyeglasses, hearing aids, cataract surgery, knee or hip replacement, etc. before 2016 is over if you are a senior (age 65 or older).
It could be you will not benefit much or at all in 2017 from medical expenses and you might even find the Standard Deduction is better than itemized deduction on Schedule A of form 1040.
In 2016 the Standard Deduction for a single person is $6,300 plus $1,550 if you are 65 or older. For joint returns, the Standard Deduction in 2016 is $12,600 plus $1,250 for each person age 65 or older. Since inflation (according to the government) is low in 2016, the Standard Deduction will probably be about the same in 2017.
Only our Congress could have a different amount of deduction for being age 65 or older depending on whether you are single or married. It sounds like another marriage penalty.
However, the plan might be to increase Itemized Deductions for 2016 and plan to take the Standard Deduction in 2017. Instead of paying the quarterly real estate taxes with payments Jan. 2, 2017 and March 6, 2017, maybe it would be better to pay those two items in Dec. 2016 so your total Itemized Deductions are increased?
If you were planning to buy something with big sales tax in 2017, perhaps you could consider buying it in 2016 instead so the increased sales tax deduction will save you some income tax?
If you were planning to make charitable contributions in 2017, perhaps some could be done in Dec. 2016 (but let the charity know why the timing change).
Bunching itemized deductions in every other year and claiming Standard Deduction in the other years might be a benefit to consider. Did you hear “One sprinkles the most sugar where the tart is burnt.” Dutch Proverb
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.