Cindy-Re: Dumb ? about SS-

[Guest guest]

Hi Cindy

Thanks so much for your help. I guess that makes sense. I'm afraid this

" tax-illeterate " one dosen't really understand what you mean by the second part

of

your answer though pertaining to medical coverage.

Can you , please, help me onne more time?

Thanks, Cindy.

Take care,

In a message dated 2/15/04 11:34:54 AM Eastern Standard Time,

cindyh@... writes:

> <From: Mdmssmile@...

> Is this income taxable? My private income is not taxable which is

> wonderful.>

> ~

> ,

> Whether SS is taxable depends on your total income. I don't know about how

> the private carrier would be handled.

> As far as coverage for medical coverage in either or both, it will be

> deductible for medical expenses.

> CindyH

> Wisc.

>

[Guest guest]

> Thanks so much for your help. I guess that makes sense. I'm afraid this

> " tax-illeterate " one dosen't really understand what you mean by the second

part of

> your answer though pertaining to medical coverage.

> Can you , please, help me onne more time?

My best advice would be to seek the assistance of a tax advisor. However,

here is a simplified explanation with simple numbers.

Adjusted gross income (AGI) is your income, minus deductions. Now, if your

medical expenses are more than 7.5% of your AGI, you may deduct the amount

that is over 7.5% of your AGI. If your medical expenses are less than 7.5%

of your AGI, you may not deduct any expenses.

Let's say you make $110,000 a year and your other deductions are $10,000.

This would make your AGI $100,000. If you multiply $100,000 by 7.5%, the

amount is $7,500.

Now, let's say your medical expenses this year are $5000. Because $5,000 is

less than $7,500, you would not be able to take any deduction for medical

expenses. Your taxable income would be $100,000.

On the other hand, if your medical expenses are $10,000 you would be able to

deduct the amount of medical expenses that is greater than $7,500. $10,000

minus $7,500 is $2,500, so you would deduct $2,500 from your AGI for your

taxable income. Your taxable income would be $97,500.

So, what are deductible medical expenses? Medical expenses are expenses you

pay out of pocket that relate to your health care. Medical expenses are not

expenses that are reimbursed by insurance or are covered by your employer.

For example, if your insurance costs $100 a month, but your employer pays

$90 a month and you only pay $10, then the deductible amount for tax

purposes is only $10 a month.

Medical expenses include amounts you pay for the following: insurance,

co-pay, medical bills, medical equipment, and prescriptions. Surprisingly,

medical expenses also include such things as modifications you make to your

home to accommodate wheelchairs. All costs related to having a service dog

are also considered medical expenses, including food, treats, toys,

equipment, and veterinary bills. Even items like hot tubs can be considered

a medical expense tax deduction if your physician writes you a prescription

for it.

Hope this helps. Again, I stress the importance of consulting a

knowledgeable tax advisor to help you with your specific questions.

-Barb