Tax deductions

Tax deductions could include coronavirus medical costs and teacher expenses


Most taxpayers check the box to claim the standard tax deduction. This tax season, however, the pandemic has made many people want to know how they can cope with medical bills related to COVID-19.

Those who had huge medical bills last year should gather their documents to see if they can possibly deduct some of their high personal expenses.

Or if you’ve seen a drastic reduction in your income – and had extraordinary medical bills – you might be able to deduct medical expenses for 2020 when you couldn’t in the past.

Here are some tax breaks to consider:

A break for teachers

If you are a teacher, write it down.

Eligible teachers can now deduct unreimbursed expenses for COVID-19 protective items to stop the virus from spreading in the classroom.

“The deduction for teachers has been extended to include expenses for PPE and expenses related to COVID,” said Mark Luscombe, senior analyst for Wolters Kluwer Tax & Accounting.

According to the Internal Revenue Service, COVID-19 personal protective equipment includes face masks, disinfectant to use against COVID-19, hand soap, hand sanitizer, disposable gloves, as well as tape adhesive, paint or chalk to guide social distancing. If a teacher were to cover the cost of the plexiglass, well, that could be used for this deduction as well.

Many teachers know they can claim tax relief of $ 250 for many out of pocket expenses. So make no mistake, the deduction is nothing new but adding the costs related to COVID-19 is useful and offers more possible ways to achieve this deduction.

The coronavirus relief was part of the Consolidated Appropriations Act, 2021, enacted in late December – and would apply to items purchased after March 12, 2020.

Teachers can deduct up to $ 250 for unreimbursed business expenses for classroom equipment, such as books, supplies, computers, including related software, and additional equipment you use in the classroom.

If both spouses are teachers, the deduction can be up to $ 500 on a joint return.

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The tax break applies to those who teach kindergarten to grade 12. This tax break does not apply to preschool teachers or college instructors.

Teachers can claim the educator’s expense deduction whether they use the standard deduction or itemize their tax deductions. You must file Schedule 1 and report the expenses on line 10.

Claim medical expenses

Make no mistake, the barriers remain high for those who want to claim their medical bills.

There is still some good news. Taxpayers continue to have a 7.5% threshold on 2020 medical expense claims and it will be 7.5% again in 2021 and beyond.

“If you itemize the deductions, you can deduct medical expenses to the extent that they exceed 7.5% of your adjusted gross income,” said Alison Flores, senior tax research analyst at H&R Block’s Tax Institute.

Flores noted that deductible medical expenses include amounts paid for the diagnosis, cure, alleviation, treatment or prevention of disease. After tax, but not before tax, medical insurance premiums are also deductible.

“Only personal expenses are deductible,” said Flores. “Expenses reimbursed or reimbursable by your mutual are not deductible.”

Many people would not have been able to deduct medical expenses next year when they filed a tax return if a tighter 10% threshold for claiming medical expenses had started as planned in 2021.

But the December coronavirus relief plan that was adopted in Washington included a measure to keep the threshold at 7.5% at all times. (Permanent, of course, could be seen as a relative word in tax policy.)

The 7.5% threshold was seen as a big win for the elderly and others with high medical expenses.

COVID-19 Expenses You May Face

When it comes to the coronavirus, no one should be charged out of pocket to pay for vaccines, whether you have insurance or not.

But consumers could face other expenses.

On the bright side, high-deductible health plans have been allowed to cover testing and treatment for COVID-19 without a deductible, Luscombe said. So this may have helped some consumers to limit some personal expenses.

When it comes to testing, federal law requires health insurers to cover COVID-19 testing – including the test itself, the related visit, and other testing-related services – without cost sharing for people. covered by most private health plans, Medicare and Medicaid, according to the Peterson Center on Healthcare and the Kaiser Family Foundation.

Even so, it is possible that some patients, including the uninsured, will receive bills for COVID-19 diagnostic tests and related services, and these bills can often be very different from patient to patient.

Some plans have denied requests for COVID-19 testing or cost sharing applied for COVID-19 testing for asymptomatic people, unless they knew or suspected they were exposed to COVID-19 and were referred for testing by their provider, according to a Peterson report Center on Healthcare and the Kaiser Family Foundation.

And in some cases, the report noted, some plans have denied requests for COVID-19 testing unless directly ordered by a doctor.

Going forward, the Biden administration released new advice in early 2021, which removed some barriers to testing and clarified that insurers must cover testing without cost sharing for asymptomatic people and without requiring medical screening.

Patients could also end up with personal expenses due to deductibles and unreimbursed expenses under their health insurance plans.

“COVID-19 diagnostic tests ranged from $ 20 to $ 850 per single test, not including the cost of a provider visit, facility fees, sample collection or any other test that may have been included during the test, ”according to the Peterson-KFF Health System Tracker.

“These services may be covered by insurance, but it is not guaranteed for all patients.”

Costs may skyrocket for COVID-19 cases that need hospital care to anywhere from $ 20,000 to $ 88,000 or much more, depending on length of stay and other factors. These Peterson-KFF estimates are based on the cost of care for people covered by the employer – and they would not reflect what someone with private insurance would have to pay out of pocket. These are personal expenses that could be tax deductible.

If you’re hospitalized for treatment related to COVID-19, Flores of H&R Block said it’s likely all of your expenses will be deductible medical expenses. Check your insurance policy and coverage to find out what expenses your insurance covers.

When can you claim medical expenses?

Typically, Flores noted, medical expenses are deductible in the year the medical provider is paid, regardless of when the services were provided.

“If you pay for medical treatment with a credit card, you deduct the expenses for the year you paid the provider with the credit card, not when you pay your credit card bill,” Flores said.

Claiming the medical deduction is not easy for many taxpayers.

If you have an adjusted gross income of $ 50,000, for example, you would need at least $ 3,750 in qualifying medical expenses in 2020 to meet the threshold. And only expenses after this amount would qualify for a deduction.

So if you had $ 5,000 in qualifying expenses in this example, you could claim $ 1,250 in medical expense deductions.

The higher your adjusted gross income, the more difficult it might be to claim many medical expenses.

But here’s another point: you must have enough other deductions, such as charitable contributions, mortgage interest, local and state taxes, to itemize and exceed the standard deduction.

The standard deduction is $ 12,400 in 2020 for single taxpayers and married people filing separately. That’s $ 200 more than in 2019.

The standard deduction for joint filing is $ 24,800 for the 2020 tax year, up $ 400 from 2019.

For heads of households, the standard deduction is $ 18,650 for the 2020 tax year, up $ 300.

Age matters: There is an additional standard deduction for married taxpayers 65 years of age or older or blind of $ 1,300. For a single taxpayer or a head of household aged 65 or over or blind, the additional standard deduction for 2020 is $ 1,650.

If a person is both 65 or older and blind, the amount of the additional deduction is doubled.

The Internal Revenue Service has an online tool called the Interactive tax assistant, which can help you to research the question: “How much is my standard deduction?” “

About 87% of 153.7 million taxfilers in the 2018 tax year, took the standard deduction, according to the Tax Foundation.

The Tax Cuts and Jobs Act 2017 nearly doubled the amount of the standard deduction and imposed new limits on certain itemized deductions, including deductions for local and state taxes paid and mortgage interest. Personal income tax changes are expected to expire after December 31, 2025.

The tax changes resulted in a 58% drop in the number of people who detailed 2018 returns compared to 2017 returns. Around 46.5 million taxfilers recorded in 2017 compared to 19.5 million on 2018 returns.

When it comes to medical expenses, filers should understand that expenses you covered with money from a health savings account or flexible health spending account would not be deductible on your return. federal revenue.

“In other words, you can’t double dip,” Flores said.

ContactSusan tompoor vthat is to say [email protected]. Follow her on Twitter@trickster. To subscribe, go to Rlearn more about business and join our company newsletter.