As medical costs continue to soar, it might be a good idea to reconsider whether or not you might benefit from a medical expense deduction. If so, you’ll want to start keeping track of your medical expenses. Attached is a list of many deductible medical expenses, some of which you may not have realized were allowable as medical deductions. This list can help you get an idea as to how much you are spending on unreimbursed medical expenses. Keep in mind that only expenses that aren’t reimbursed are deductible.

To receive a tax benefit from unreimbursed medical expenses, you’ll need to jump two hurdles. If your unreimbursed medical expenses will exceed these hurdles, you may benefit from keeping up with them. The first hurdle is the 10% (7.5% if you or your spouse are age 65 by the end of the year) of your Adjusted Gross Income (AGI) hurdle. Only unreimbursed medical expenses exceeding this hurdle are deductible as an itemized deduction. You can use the following chart to get a rough idea as to whether your unreimbursed medical expenses will get over this hurdle.

The next hurdle is the itemized deduction hurdle. Here, medical expenses that exceed the 10% or 7.5% limit, as applicable, are combined with other itemized deductions (such as, interest, taxes, and charitable contributions) to determine total itemized deductions. You’ll benefit from your itemized deductions only to the extent they total more than your standard deduction for the year. The 2014 standard deductions are generally as follows:

If you are married, your standard deduction is increased by $1,200 for each spouse who is blind. It’s increased by another $1,200 for each spouse who is age 65 or over. If you are single, your standard deduction is increased by $1,550 if you are blind/age 65 or over.

Finally, high-income taxpayers are subject to the phaseout rules, which cause a taxpayer to lose itemized deductions. For 2014, the phaseout begins when AGI exceeds $$305,050 for a married filing joint ($152,525 for married filing separate) filers, $254,200 for single filers, and $279,650 for head of household filers. Because the mechanics of this limitation is complex, we will not try to explain it here. If your AGI exceeds these amounts, you may want to give us a call. To the extent that you have control over the timing of medical expenses or other itemized deductions, you might consider bunching deductions into a lower income year in order to lose fewer dollars to the phaseout.

Bottom Line: If it looks like your unreimbursed medical expenses will be high enough to jump all these hurdles, it’s time to start keeping up with your receipts. Please give us a call if you have questions or want to know more about medical deductions.