Date: 2007-02-07
Jackson Hewitt's Weekly “Tax Time Tip”
THIS WEEK’S TIP: REMEMBER MEDICAL EXPENSE DEDUCTIONS WHEN PREPARING A 2006 TAX RETURN
PARSIPPANY, N.J., February 7, 2007 – Jackson Hewitt Tax Service Inc. (NYSE: JTX), an industry leader providing full service individual federal and state income tax preparation, continues its weekly tax season series, “Jackson Hewitt Tax Time Tips,” highlighting key issues for taxpayers to consider when they file a 2006 individual income tax return.
This Week’s Tip: Claiming medical expenses as deductions on a tax return may help taxpayers lower their taxable income and may increase a refund (if eligible).
Unreimbursed medical expenses, including dental and vision, may be eligible as deductions for taxpayers who itemize. The deduction is limited to the amount of medical expenses paid that were greater than 7.5% of the individual taxpayer’s adjusted gross income (AGI).
“Taxpayers can deduct certain medical expenses for themselves as well as for a spouse or a dependent, provided the person qualified as a legal dependent at the time the service was performed or the expense was paid,” notes Mark Steber, Vice President of Tax Resources, Jackson Hewitt Tax Service Inc. “Now is the time to gather those receipts documenting any medical costs incurred throughout the last year and have them available when you meet with your tax preparer.”
Some of the medical deductions allowed include:
- Doctor and dentist visit “co-pays” (your portion of the expense)
- Prescription drugs (including birth control pills)
- Surgery
- Lab and test fees
- Bandages
- Glasses, contacts and the cost of related supplies (contact solutions, drops, etc)
- Lead-based paint removal
- Medical, dental, hospital and vision insurance premiums
- Long-term health insurance premiums
- Psychiatric and psychological treatment
- Special items such as artificial limbs and false teeth
- Special education for mentally or physically disabled persons
- Expenses to cover a smoking cessation program (note that you cannot deduct the cost of related non-prescription drugs such as nicotine gum or patches)
- Transportation for needed medical care, which can be calculated using a standard mileage rate
Note that there are some expenses that cannot be deducted, such as:
- Expenses for general health, including trips to improve general health
- Medicine purchased without a prescription
- Nutritional supplements, vitamins, and “natural medicines,” unless recommended by a medical practitioner for a specific medical condition diagnosed by a doctor
- Prescription drugs a taxpayer brings in or orders from another country (generally)
- Illegal operation or treatment
- Surgery for purely cosmetic reasons
- Teeth whitening
- Weight-loss expenses not for the treatment of obesity or other disease
Steber also notes that the cost of health insurance for a taxpayer and his/her family may be deductible as a direct adjustment to income for self-employed taxpayers. In addition, contributions to a Health Savings Account (HSA) may be deductible as a direct adjustment to income.
There are a few other items to note for a 2006 tax return. First, the standard mileage rate allowed for operating expenses has increased this year to 18 cents per mile if using a car for medical reasons, so all of those trips to doctor offices, labs, and hospitals can really add up. Also, a new voluntary prescription drug insurance program called “Medicare Part D” went into effect on January 1, 2006. For taxpayers enrolled in this program, premiums paid are reduced by a federal subsidy. The value of the federal subsidy, like all Medicare benefits, is excluded from income. Taxpayers can, however, include premiums paid for Medicare Part D insurance in their medical expenses.
Information on the newly-extended provisions, as well as other important resources and tips for getting started, can be found online at
www.jacksonhewitt.com.To locate a nearby Jackson Hewitt office, contact 1-800-234-1040.
About Jackson Hewitt Tax Service Inc.
Jackson Hewitt Tax Service Inc., with over 6,000 franchised and company-owned offices throughout the United States during the 2006 tax season, is an industry leader providing full service individual federal and state income tax preparation. Most offices are independently owned and operated. The Company is based in Parsippany, New Jersey. More information may be obtained at www.jacksonhewitt.com. To locate the Jackson Hewitt Tax Service® office nearest to you, call 1-800-234-1040.