Maximizing your medical deductions

Medical costs seem to increase every year. There is a way to get Uncle Sam to foot some of the doctor bills, but you need to make sure you know and follow the rules.Bankrate’s 2010 Tax GuideTax tips and toolsHow do I … ?Filing and refundsReal estate and capital gainsFamily and educationOn the jobInvestments and retirementCharitable givingYour state taxes<< All guide contentThe Internal Revenue Service lets you deduct medical costs as long as they are more than 7.5 percent of your adjusted gross income. This percentage may seem unattainable at first glance, but with a little tax triage you might just meet it.

{loadposition in-article}

Don’t overlook the medical expenses of everyone listed on your tax return. Medical and dental bills for you, your spouse and your dependents count toward reaching the allowable deduction limit. You might be able to count some medical expenses you paid for a parent, even if Mom or Dad isn’t considered your dependent for exemption purposes. [Read the full article]

Asset allocation has long been the mantra of financial advisers and smart investors intent on minimizing risk through diversification. Now, with the specter of higher taxes on income, qualified dividends, and long-term capital gains looming in 2011 and beyond, the idea of “asset location” for tax purposes is likely to become equally pervasive. “Location” in this sense means where an asset finds its most suitable home: a taxable account, or a tax-deferred portfolio such as a 401(k) plan or individual retirement account (IRA). This year, investors need to get ready for expiration of the Bush Administration’s tax cuts and position their portfolios accordingly, says John Nersesian, head of Chicago-based Nuveen Investments’ wealth management team, which works with financial advisers. At the margin, the top 35% income bracket will likely climb to 36% and 39.6%, while qualified dividends and long-term capital gains — on securities held for more than one year — will go from 15% to 20%. [Read the full article]

American International Group (NYSE:AIG – News) will long be remembered as the towering insurance and financial services company that almost deep-sixed the U.S. economy. Following a near-death experience in 2008, the insurer has required a series of government bailouts totaling $182.3 billion. So here, for a change, is some news about AIG that won’t make you cringe: The company is showing signs of a turnaround.

New York-based AIG was scheduled to report results on Feb. 26, a couple of days after Bloomberg BusinessWeek went to press. An expected fourth-quarter loss, stemming from more than $5 billion in charges tied to paying down debt, won’t tell the whole story. Buried under the ugly numbers is evidence that AIG’s primary insurance businesses are picking up. Consider that revenue at AIG’s property-casualty businesses rose for three straight quarters last year after plunging 23% in the final three months of 2008. [Read the full article]

In Washington’s current state of dysfunction, everyone has a favorite hyper-partisan moment. House Republican Whip Eric Cantor’s moment came at a White House meeting with congressional leaders on day three of the new Administration. He handed President Barack Obama a list of ideas to fix the economy. Pointing to a small business tax-cut item, Obama said: “We disagree on tax policy.” When Cantor tried to justify his own position, Obama responded: “Elections have consequences, and at the end of the day, I won.”

Since then, Republicans have made it their mission to prove that Obama’s 53% popular vote may have put him in the White House, but it didn’t give him the final word on fundamental economic policy debates. The GOP’s coordinated resistance has derailed treasured Obama legislative priorities such as financial regulation, carbon credits, and, above all, health care.

The resulting gridlock has cost the President much of his popularity, particularly among independents. A Jan. [Read the full article]

You may also like...