Tuesday, February 26, 2013

It's Taxing.....

Since I had the afternoon off I figured I be as productive as possible and go through a years' worth of papers, receipts and calendar records to get everything ready for our tax preparer.  I started at one.  With a one our break for dinner and some homework with Babygirl, I just finished.

There was the usual stuff - mortgage, work expenses, rental property maintenance.

Then there was Babygirl.  Kidney transplants don't come cheap.

To be completely honest, it wasn't just her.  Hubby and I have our own medical issues and prescriptions, and of course the cost of our health insurance (not counting the Medicare premium) would be the same for the family no matter what.  But those costs together never add up to enough for us to deduct them.  I think we made it this year, though.

I'll start at the bottom, with the lowest deductible expense: Pharmacy.  We filled nearly 200 prescriptions and paid $1396 in co-payments.  Remember, for most of these we get a three-month supply.

Next:  Travel.  Tolls and parking are deductible ($626), but gas (oh don't even start) is not.  Some tolls we failed to get receipts for, and some were donated by those from whom we borrowed cars since they wouldn't let us pay back on their Easy Pass bills, so the total would have been much higher.  Mileage came to 14,701 miles, which is a deductible of $3381, for a total of $4007.

Close behind this?  Health insurance premiums (medical, dental, vision, Medicare) at $5413. 

The prize winner:  Medical co-payments and deductibles.  The total of $8140 didn't particularly surprise me.  It would have been MUCH, much higher if Babygirl didn't qualify for Medicare. And we pay $100/month for that coverage (which is added up in the health insurance premiums above). 

We have a pre-tax medical spending account and make the maximum contribution, so $2400 cannot be applied to the medical deduction.  So the total is $19,157, $16,757 of which is 'deductible.'  This is well over what Hubby made at his part-time job in the same year.

How much of this will actually be deducted depends on what our taxable income turns out to be, but be assured there WILL be a sizable deduction even after we subtract 10% of that total.

There is more to the finance of this problem than this, of course, but that's a topic for another post.


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