By Joy Taylor and Kim Clark
From Kiplinger’s Personal Finance
Question: What medical bills qualify for a tax deduction?
Answer: Taxpayers who itemize their deductions on Schedule A can claim medical expenses not reimbursed by insurance for themselves, their spouse and dependents. The cost must be incurred primarily to alleviate or prevent a physical or mental disability or illness.
But there is a floor. Medical expenses are deductible only to the extent the total exceeds 7.5 percent of your adjusted gross income (AGI). For example, if you itemize, your AGI is $100,000 and your total medical expenses are $9,000, you can deduct only $1,500 of medical expenses on Schedule A ($9,000–$7,500).
The list of eligible medical expenses for tax deductions is broader than most people think. It includes:
- The basics, such as out-of-pocket payments to doctors, dentists, optometrists and other medical professionals
- In vitro fertilization
- Medical driving, or 22 cents per mile in 2023; 21 cents per mile in 2024
- Treatment for drug use or alcoholism
- Health and wellness costs, such as smoking cessation programs, nutritional counseling for a doctor-diagnosed disease, weight-loss programs, and certain special food to help with the treatment of obesity, hypertension or heart disease
- Long-term care costs
- Certain home improvements to adapt to a disability or illness
- The cost of a service dog
Question: My brokerage account says it has SIPC coverage. What is that?
Answer: The Securities Investor Protection Corp. (SIPC) may be one of the most misunderstood organizations in the investment world. SIPC was created by a 1970 federal law to protect investors against the loss of cash and securities when a member brokerage fails or runs into financial trouble. All registered broker-dealers, with a few exceptions, are SIPC members. But SIPC is not a government agency and has no regulatory or investigatory powers. It will not reimburse you if the value of your investment drops or if you are victimized by a fraud.
This small nonprofit organization’s mission is to return investors’ holdings when a brokerage fails—and only in a limited set of circumstances. SIPC covers up to $500,000 for cash and securities owned by a customer, of which up to $250,000 can be cash.
Since its 1970 creation, SIPC has overseen the liquidations of 330 failed brokerage houses and returned more than $140 billion to more than 773,000 investors. Fortunately, SIPC hasn’t had to handle a new brokerage failure case since 2017.
©2024 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.
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