News & Articles

Beware: Several CARES Act Tax Provisions Will Soon Expire

Posted on Mon, Nov 16, 2020

The CARES Act granted several valuable federal tax breaks for individuals and businesses. But most will expire at the end of 2020 or at the end of tax years that begin in 2020. Here's a roundup of tax breaks scheduled to go off the books soon, unless Congress extends them.

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Tags: Tax Break, COVID-19, cares act

Medical Costs: Can I Really Get a Tax Break for That?

Posted on Mon, Apr 22, 2019

It's difficult for many people to write off medical expenses because of the limits imposed under the tax laws. But you may qualify by including every expense allowed. Some of the qualified procedures may surprise you.

ELIGIBLE

NOT ELIGIBLE

A weight-loss program undertaken at a physician's direction to treat obesity or a condition such as heart disease. A weight-loss program to maintain your appearance. Meal replacements, diet foods and supplements that are substitutes for the food that you would normally consume.
Treatment at a drug or alcohol clinic. Smoking-cessation program and prescribed drugs for nicotine withdrawal. Trips your doctor recommends to rest or improve your morale
Acupuncture Marriage counseling
Dentures, hearing aids and orthopedic shoes. Household help, even if recommended by a doctor.
Admission and transportation to a medical conference if the conference concerns the chronic illness of you, your spouse, or a dependent. (Meals and lodging aren't deductible.) The collection and storage of DNA, unless you can show how DNA will be used for diagnostic testing. 
Lamaze classes for a mother-to-be. Maternity clothes.
Teeth cleaning and orthodontia Teeth bleaching and toothpaste
A wig purchased on physician's advice for the mental health of a patient bald from disease. Hair transplants
Contact lenses and peripheral materials as saline solution and enzyme cleaner. Retin-A for wrinkles
Nursing services at home or a care facility, including giving medication, changing dressings, bathing and grooming. Nursing services for a normal, healthy baby. (But you might be able to take a credit for child-care expenses.)

For example, most insurance plans won't cover laser eye surgery, such as radial keratotomy or "Lasik," because they consider it a cosmetic procedure. But it generally qualifies for a medical deduction and as an expense in a flexible spending account. (The IRS used to disallow Lasik as a deductible medical expense.) With the cost running into the thousands in most parts of the country, it's a considerable outlay. 

As with most tax laws, the medical rules can be tricky. You can't deduct over-the-counter vitamins but the U.S. Tax Court has ruled that medically prescribed vitamins to treat a specific condition are allowed.

There are also many exceptions to the general laws. For instance, you can't write off the cost of unnecessary cosmetic surgery to improve your appearance. That generally means no face lifts, electrolysis or liposuction. But you can deduct cosmetic surgery that's needed to improve a deformity directly related to a congenital abnormality, an injury from an accident, or a disfiguring disease.

A list of some other expenses that are eligible or ineligible for tax breaks appears in the right-hand chart. Here's a rundown of the basic rules:

Flexible spending accounts (FSAs). These tax-advantaged accounts generally have a "use-it-or-lose-it" feature on money left at the end of the year. So plan to empty your account by buying eyeglasses, filling prescriptions, getting a dental checkup or spending money on the eligible items listed in the chart. Note: Some FSAs allow participants an extra two-and-a-half-month grace period to use up the money in accounts if the employer properly amends its plan.

 

Medical deduction. Medical and dental expenses that are not reimbursed by insurance are deductible to the extent your annual total exceeds 10% of your adjusted gross income in 2019 (up from 7.5% in 2018). This can be a difficult threshold for many taxpayers to meet. To qualify for medical deductions, you must also itemize. 

When adding up your medical costs, don't forget the cost of traveling to your doctor or medical facility for treatment. If you go by car, you can deduct a flat rate, adjusted by the IRS each year, or you can keep track of your actual out-of-pocket expenses for gas, oil and repairs. 

With either the actual costs or the cents-per-mile method, you can add in the amounts paid for parking and tolls. If you must travel out of town for medical treatment, you may also qualify to write off some of the cost.

Each year, take a look at your medical expenses. If you are close to — or exceed the threshold — you may want to get as many expenses as possible into this year. Otherwise, you may as well postpone elective expenses until next year when you have another shot at a deduction.

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Tags: FSA, Tax Break, Medical

Many Businesses Will Celebrate Tax Cuts in the New Tax Year

Posted on Tue, Jan 09, 2018

Most U.S. businesses will receive a big tax cut starting with their 2018 tax years, thanks to the new law that was enacted on December 22. But some industries (such as retail, hospitality and banking) generally expect to reap more benefits than others (such as certain professional practices).

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Tags: Small Business, Tax Break, AMT, Tax Cuts and Jobs Act (TCJA)

Which Parent Gets Child-Related Tax Breaks After Divorce?

Posted on Mon, Mar 13, 2017

Divorce causes tax issues. For example, which parent is allowed to claim a host of valuable child-related tax breaks? Sometimes, but not always, it depends on which parent is allowed to claim the child as a dependent. This article explains what you need to know.

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Tags: Tax Breaks, Divorce, Tax Break

Tax and Other Considerations When Selling Your Home

Posted on Mon, Jun 17, 2013

The prime residential real estate selling season is in full swing and 2013 looks like it could be a good time to sell, depending on your situation. Mortgage interest rates are still historically low and the National Association of Realtors reports that home sales are up, compared with a year ago.

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Tags: CPA Firm, Echelbarger, Tax Break, National Association of Realtors, Selling Your Home, EHTC, Residential Real Estate

Update on the Section 179 Deduction Tax Break

Posted on Mon, May 20, 2013

The latest tax law includes important depreciation changes that will benefit businesses for the 2013 tax year (and 2012 if you haven't filed yet). Under Section 179, a business can deduct qualifying assets (including most software) in the year they are placed in service, rather than writing them off over several years under the regular depreciation rules. This article explains the rules.

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Tags: Michigan State and Local Tax (SALT), Corporate Income Tax, business consulting, CPA Firm, Articles, Echelbarger, Tax Break, EHTC, Fiscal Cliff, Section 179 deduction, American Taxpayer Relief Act of 2012