If you’re like many Americans, doing your taxes is a confusing chore. Deductions are crucial elements to filing taxes, especially if you’re expecting a return. However, few people know about all their options, especially their health deductions. And as we move into 2013, the new Affordable Care Act will cause even more changes to health deduction section of your tax forms, but not as much as you might think right away.
“Most major changes brought by the Affordable Care Act will come in 2014,” advised Jean Chatzky, finance expert and journalist whose Jean Chatzky’s Money School debuts this April. However, there are a few things that Chatzky advises taxpayers watch for this year:
- The contribution limit for Flexible Spending Accounts has been revised downward, to $2,500 beginning in 2013. There was no limit before, though most employers capped it at $5,000.
- Medicare payroll taxes may increase for some taxpayers. Those who earn over $200,000 as an individual or $250,000 as a couple will pay 2.35% to medicare. Those who earn less will continue paying the current rate of 1.45%.
Where taxpayers can see the biggest advantage will be in their medical-related deductions.
“Many taxpayers assume they can’t reach the 7.5% threshold to deduct medical expenses, but you might be surprised if you add it all up and include everything the IRS allows,” advised Chatzky. She provided a lot of insight on the common oversights we make that can and probably will push you to the 7.5% threshold.
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