Prepare for Your 2023 Tax Filing

Another year has passed and now taxes are due. I will be reviewing how you can maximize tax breaks, especially if you paid a lot out of pocket for medical treatment and prescriptions. Remember, you can also include your premiums in the cost of medical care.

Review my webinar from March below and read the article to learn more on this important subject. It's not just about filing your 2023 taxes, it's about preparing for your 2024 taxes as well. 

Preparing for Your 2023 Tax Filing

Pull together all of your receipts for what you paid for out of pocket for medical care.
You can go to your pharmacy and request a printout of last year's record. You should also be able to look at your last EOB or EOI to determine what you paid for medical out-of-pocket prior to insurance paying for everything.

Also, get a copy of your premiums spent on medical insurance, as long as they aren’t deducted pretax. If you had to travel for treatment, pull together the costs for that as well. 

Learn When To Itemize and What to Deduct

It's to your advantage to itemize if you have more to report over the standard deduction.  itemization is only beneficial if your itemization totals are above 7.5% of your adjusted gross income.

Here is a list of out-of-pocket costs you might not have known you could deduct: 

• Dental 
• Rehab/smoking cessation with a doctor's subscription
• Home modifications recommended by your doctor (such as a ramp, bathroom equipment, etc.) 
• Vision 
• Hearing 
• Alternative medicine (such as acupuncture, when recommended by a doctor) 
• Lodging for medical treatment when traveling 
• Travel/admission to a medical conference relating to your illness 
• Home care/personal attendants, as well as the cost of modifying your home for their lodging 
• Service animals 
• Wigs due to hair loss as a result of a medical condition (chemotherapy or alopecia) 
• Travel to pharmacy 
• Travel to therapy sessions (physical or mental)
• Tutoring and testing for children with learning disabilities 

There may be other items you can deduct without you realizing it. Go to IRS.gov to learn more about what is deductible. 

Other Financial Tips and Additional Tax Benefits

If you receive a grant from a pharmaceutical company or from a non-profit to help you pay for your prescriptions you do not have to claim them. These grants are free to you. 

Additional tax benefits include donations to charities. If you volunteer at a non-profit organization, you can write off the cost of travel to perform your duties. Keep a copy of your receipts in the event you are audited. 

You can deduct costs for long-term care including premiums to a policy. Contributions to a Health Savings Account except for employer contributions are tax deductible. 

Start Preparing For Your 2024 Tax Filing 

Preparing for taxes for the next tax year begins even before filing last year's taxes. 

Consider things you can do throughout the year in anticipation of filing.

• Do you need to change your exemptions because of decreased income or an increase in income? Don’t forget to include bonuses if there are any.
• Have you accounted for all your deductions? Are you providing care for a family member?
• Do you travel while volunteering for a non-profit? Keep records as you go.

Consider using a credit card that will record taxable expenses.

Work with a financial advisor to consider changes to investments that may provide tax-preferred income. 

Next year, tax season will be here before you know it. Remember, tax planning comes before tax preparation.