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How to Use Deductions on a Tax Return

What deduction options do I have when filing a tax return?

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Art Auerbach
Tax Director, Goodman & Company, LLP
http://www.goodmanco.com/  

Serving clients since 1932, Goodman & Company brings 75 years of knowledge and experience to the demands of today's ever-changing business environment. Throughout the past 75 years, we've never strayed from our mission-to provide each client with personal, high-quality service using the most up-to-date technology and resources.

What deduction options do I have when filing a tax return?

Basic information to prepare an individual income tax return, Form 1040 and the basic schedules. This video is designed for those individuals who want to undertake the preparation of their tax return. There are tips and pointers for those who have attempted this feat in prior years.

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Host: Can I claim medical expenses as a deduction?

Arthur Auerbach: Yes you can. But remember the medical expenses, you claim here are the ones that are not reimbursed. So you take your total medical expenses, you subtract out reimbursements you have got from Insurance companies or Medicare or things that were paid by Medicaid. You subtract out the amount that you got back from your Cafeteria plan or flexible spending arrangement at your Employer and the net result is what you had available, left to be medical expenses. Now, they could be doctor visits, the things that most people forget are parking or tolls to get to or from doctors or hospitals. There is a deduction for Medical Mileage. So if you use your car, obviously, not all your doctors and dentists are in the basement of your house. So you are going to go to get there. All that mileage can add up and based on the mileage allowance that the IRS gives you, that can add up to an additional medical deduction. Eye glasses, Prescription medications that are not reimbursed or paid for. All your Co-pays, people tend to forget that if you are covered by an Insurance carrier, or maybe you have got a $15 or $20 or $25 Co-pay at the physician's office or service provider. Add up all of those Co-pays because that's a medical deduction. You were out of pocket. Look at your pay that we referred to earlier. If you are participating with the employer in the cost of your medical coverage, so the employer pays for the employee only but you pay for dependent care. That's a medical deduction.

There is a limited deduction for long term care Insurance as well. Now all of that gets added up and it's subject to a limitation of 7.

5% of your adjusted gross income. So to get a medical deduction, all of those expenses have to exceed 7.

5% of the bottom-line on page 1 of your 1040.

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