Residents who receive health insurance in Plano, Texas will be allowed to make medical expense deductions for an additional two years through the new GOP tax legislation. The law will require taxpayers to itemize their health care expenses to qualify.
Plano health insurance consumers will be getting some positive news regarding the GOP tax bill. Deductions for qualifying medical expenses will be expanded for two years. Previous versions of the legislation called for complete elimination of medical expenses.
According to tax experts, taxpayers in Plano who itemize their healthcare deductions will be able to write off qualifying medical expenses that exceed 7.5 percent of their adjusted gross income for tax years 2017 and 2018. The following year, the threshold would return to the current 10 percent.
American taxpayers age 65 and older have taken advantage of the lower threshold (7.5%) for several years in the past. Once the sweeping health care legislation (ACA) was enacted, the threshold increased to 10 percent in 2013, except for the group of 65+ old taxpayers.
The exemption was to expire at the end of tax year 2016. With the 2 year expansion, now a larger pool of Plano health Insurance taxpayers under the age of 65 will be able to lock in the lower rate.
The GOP tax bill legislation is scheduled to be voted on the week of 12/18/17. The Republicans have faced numerous challenges writing the final bill as they have needed to make several modifications to meet budgetary guidelines. Once both chambers pass the final version, it is expected to easily obtain the signature of President Trump.
The key requirement regarding the deduction is that taxpayers must itemize their medical expenses. But itemization is only financially wise if the value of deductions is greater than standard deductions.
The new GOP tax bill will almost double the standard deduction amount for all taxpayers until 2026, when the amount would return to the current value in law today. For individual Plano taxpayers, total deductions would need to be greater than $12,000. Currently that amount is $6,350.
Married couples who file joint tax returns would require deductions greater than $24,000. At present, the amount is $12,700. Returns filed as ‘heads of households’ the expansion is $18,000, increased from the current $9,350.
“Tax laws with regard to healthcare deductions can be complicated. But for those who can itemize, this is certainly a cost savings, at least for a few additional years” according to Rick Thornton, a Plano health insurance agent.
The Urban-Brookings Tax Policy Center reports that approximately 49 million taxpayers, or roughly 28 percent, currently itemize their medical expenses. Once the tax bill is signed into law, it’s expected that less people will do so.
In 2015, approximately 9 million health care-seeking Americans saved nearly $87 billion utilizing the medical expense deduction. Almost 50 percent had annual incomes below $50,000 according to the Public Policy Institute of AARP.
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