We always seem to hear about the big, sweeping changes to the tax law. You know, the ones that Congress passes and that are always so controversial. But, we don’t hear about the tax court rulings and IRS changes that often make more of an impact to our taxes than Congress’s new laws.
Here are three new changes from the IRS that you may not have yet heard about.
First, in an interesting case first brought by 23 and me, a DNA and genetics testing lab, the IRS has ruled that some of the fee can be tax deductible as a medical expense. The IRS has stated that $117.74 of the $199 fee can be considered a medical expense. Remember, though, that medical expenses are part of itemized deductions and are only deductible to the extent that they exceed 7.5% of your adjusted gross income.
The IRS has now been asked for further guidance on smart watches and other digital devices that monitor things like heart rate and glucose. Will part of those expense also be deductible as a medical expense? We will have to await the IRS’s ruling on that.
In another case, the IRS has expanded their definition of preventative care for high deductible health plans, commonly known as HDHP.
Contributions can be made to a health savings account (HSA) by or on behalf of a taxpayer only if the taxpayer’s medical insurance qualifies as an HDHP. Under an HDHP, the taxpayer has to pay for all medical expenses other than preventive care until the annual deductible amount is spent.
The IRS expanded the definition of preventive care to include certain medical services and drugs needed for chronic illnesses. The medical insurance can cover all or part of these costs now from the first dollar without regard to how much of the annual deductible the taxpayer has paid.
Preventive care under the new guidance includes statins for heart disease or diabetes, blood pressure monitors for hypertension, beta blockers for congestive heart failure, some serotonin reuptake inhibitors for depression, some screening for diabetes, and other expenses.
And there’s one more change from the IRS. They will be releasing a new form for 2019 call the 1044-SR. This form is specifically for seniors over the age of 65. The increased standard deduction has already been incorporated in the form and the font size is larger.
You can find out more detail on these changes at www.IRS.gov. And, of course, stay subscribed at www.USTaxAid.com for these and other important tax updates and strategies.
When it comes to taxes, what you don’t know, can cost you…big time.
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