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Www dfas mil 21. Www dfas mil   Medical and Dental Expenses Table of Contents What's New Introduction Useful Items - You may want to see: What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Www dfas mil How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Yourself Spouse Dependent Decedent What Medical Expenses Are Includible?Insurance Premiums Meals and Lodging Transportation Disabled Dependent Care Expenses How Do You Treat Reimbursements?Insurance Reimbursement Damages for Personal Injuries How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons What's New Medical and dental expenses. Www dfas mil  Beginning January 1, 2013, you can deduct only the part of your medical and dental expenses that exceed 10% of your adjusted gross income (AGI) (7. Www dfas mil 5% if either you or your spouse is age 65 or older). Www dfas mil Standard mileage rate. Www dfas mil  The standard mileage rate allowed for operating expenses for a car when you use it for medical reasons is 24 cents per mile. Www dfas mil See Transportation under What Medical Expenses Are Includible. Www dfas mil Introduction This chapter will help you determine the following. Www dfas mil What medical expenses are. Www dfas mil What expenses you can include this year. Www dfas mil How much of the expenses you can deduct. Www dfas mil Whose medical expenses you can include. Www dfas mil What medical expenses are includible. Www dfas mil How to treat reimbursements. Www dfas mil How to report the deduction on your tax return. Www dfas mil How to report impairment-related work expenses. Www dfas mil How to report health insurance costs if you are self-employed. Www dfas mil Useful Items - You may want to see: Publications 502 Medical and Dental Expenses 969 Health Savings Accounts and Other Tax-Favored Health Plans Form (and Instructions) Schedule A (Form 1040) Itemized Deductions What Are Medical Expenses? Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Www dfas mil These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. Www dfas mil They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Www dfas mil Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Www dfas mil They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Www dfas mil Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Www dfas mil Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. Www dfas mil What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided. Www dfas mil If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Www dfas mil If you use a “pay-by-phone” or “online” account to pay your medical expenses, the date reported on the statement of the financial institution showing when payment was made is the date of payment. Www dfas mil If you use a credit card, include medical expenses you charge to your credit card in the year the charge is made, not when you actually pay the amount charged. Www dfas mil Separate returns. Www dfas mil   If you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Www dfas mil Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise. Www dfas mil Community property states. Www dfas mil   If you and your spouse live in a community property state and file separate returns, or are registered domestic partners in Nevada, Washington, or California, any medical expenses paid out of community funds are divided equally. Www dfas mil Each of you should include half the expenses. Www dfas mil If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. Www dfas mil If you live in a community property state, and are not filing a joint return, see Publication 555, Community Property. Www dfas mil How Much of the Expenses Can You Deduct? Generally, you can deduct on Schedule A (Form 1040) only the amount of your medical and dental expenses that is more than 10% of your AGI (7. Www dfas mil 5% of your AGI if either you or your spouse is age 65 or older)(Form 1040, line 38). Www dfas mil Example. Www dfas mil You are unmarried and under age 65 and your AGI is $40,000, 10% of which is $4,000. Www dfas mil You paid medical expenses of $2,500. Www dfas mil You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. Www dfas mil Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. Www dfas mil There are different rules for decedents and for individuals who are the subject of multiple support agreements. Www dfas mil See Support claimed under a multiple support agreement , later. Www dfas mil Yourself You can include medical expenses you paid for yourself. Www dfas mil Spouse You can include medical expenses you paid for your spouse. Www dfas mil To include these expenses, you must have been married either at the time your spouse received the medical services or at the time you paid the medical expenses. Www dfas mil Example 1. Www dfas mil Mary received medical treatment before she married Bill. Www dfas mil Bill paid for the treatment after they married. Www dfas mil Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. Www dfas mil If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. Www dfas mil Mary would include the amounts she paid during the year in her separate return. Www dfas mil If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. Www dfas mil Example 2. Www dfas mil This year, John paid medical expenses for his wife Louise, who died last year. Www dfas mil John married Belle this year and they file a joint return. Www dfas mil Because John was married to Louise when she received the medical services, he can include those expenses in figuring his medical expense deduction for this year. Www dfas mil Dependent You can include medical expenses you paid for your dependent. Www dfas mil For you to include these expenses, the person must have been your dependent either at the time the medical services were provided or at the time you paid the expenses. Www dfas mil A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. Www dfas mil The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. Www dfas mil S. Www dfas mil citizen or national, or a resident of the United States, Canada, or Mexico. Www dfas mil If your qualifying child was adopted, see Exception for adopted child , next. Www dfas mil You can include medical expenses you paid for an individual that would have been your dependent except that: He or she received gross income of $3,900 or more in 2013, He or she filed a joint return for 2013, or You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2013 return. Www dfas mil Exception for adopted child. Www dfas mil   If you are a U. Www dfas mil S. Www dfas mil citizen or U. Www dfas mil S. Www dfas mil national and your adopted child lived with you as a member of your household for 2013, that child does not have to be a U. Www dfas mil S. Www dfas mil citizen or national or a resident of the United States, Canada, or Mexico. Www dfas mil Qualifying Child A qualifying child is a child who: Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), Was: Under age 19 at the end of 2013 and younger than you (or your spouse, if filing jointly), Under age 24 at the end of 2013, a full-time student, and younger than you (or your spouse, if filing jointly), or Any age and permanently and totally disabled, Lived with you for more than half of 2013, Did not provide over half of his or her own support for 2013, and Did not file a joint return, or, if he or she did, it was only to claim a refund. Www dfas mil Adopted child. Www dfas mil   A legally adopted child is treated as your own child. Www dfas mil This includes a child lawfully placed with you for legal adoption. Www dfas mil   You can include medical expenses that you paid for a child before adoption if the child qualified as your dependent when the medical services were provided or when the expenses were paid. Www dfas mil   If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. Www dfas mil   But if you pay the agency or other person for medical care that was provided and paid for before adoption negotiations began, you cannot include them as medical expenses. Www dfas mil    You may be able to take an adoption credit for other expenses related to an adoption. Www dfas mil See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Www dfas mil Child of divorced or separated parents. Www dfas mil   For purposes of the medical and dental expenses deduction, a child of divorced or separated parents can be treated as a dependent of both parents. Www dfas mil Each parent can include the medical expenses he or she pays for the child, even if the other parent claims the child's dependency exemption, if: The child is in the custody of one or both parents for more than half the year, The child receives over half of his or her support during the year from his or her parents, and The child's parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Live apart at all times during the last 6 months of the year. Www dfas mil This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). Www dfas mil Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, foster child, or a descendant of any of them (for example, your grandchild), Brother, sister, half brother, half sister, or a son or daughter of either of them, Father, mother, or an ancestor or sibling of either of them (for example, your grandmother, grandfather, aunt, or uncle), Stepbrother, stepsister, stepfather, stepmother, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law, or Any other person (other than your spouse) who lived with you all year as a member of your household if your relationship did not violate local law, Who was not a qualifying child (see Qualifying Child earlier) of any other person for 2013, and For whom you provided over half of the support in 2013. Www dfas mil But see Child of divorced or separated parents , earlier, and Support claimed under a multiple support agreement, next. Www dfas mil Support claimed under a multiple support agreement. Www dfas mil   If you are considered to have provided more than half of a qualifying relative's support under a multiple support agreement, you can include medical expenses you pay for that person. Www dfas mil A multiple support agreement is used when two or more people provide more than half of a person's support, but no one alone provides more than half. Www dfas mil   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. Www dfas mil However, you can include the entire unreimbursed amount you paid for medical expenses. Www dfas mil Example. Www dfas mil You and your three brothers each provide one-fourth of your mother's total support. Www dfas mil Under a multiple support agreement, you treat your mother as your dependent. Www dfas mil You paid all of her medical expenses. Www dfas mil Your brothers reimbursed you for three-fourths of these expenses. Www dfas mil In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. Www dfas mil Your brothers cannot include any part of the expenses. Www dfas mil However, if you and your brothers share the nonmedical support items and you separately pay all of your mother's medical expenses, you can include the unreimbursed amount you paid for her medical expenses in your medical expenses. Www dfas mil Decedent Medical expenses paid before death by the decedent are included in figuring any deduction for medical and dental expenses on the decedent's final income tax return. Www dfas mil This includes expenses for the decedent's spouse and dependents as well as for the decedent. Www dfas mil The survivor or personal representative of a decedent can choose to treat certain expenses paid by the decedent's estate for the decedent's medical care as paid by the decedent at the time the medical services were provided. Www dfas mil The expenses must be paid within the 1-year period beginning with the day after the date of death. Www dfas mil If you are the survivor or personal representative making this choice, you must attach a statement to the decedent's Form 1040 (or the decedent's amended return, Form 1040X) saying that the expenses have not been and will not be claimed on the estate tax return. Www dfas mil Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA, Medicare Advantage MSA, or health savings account. Www dfas mil Amended returns and claims for refund are discussed in chapter 1. Www dfas mil What if you pay medical expenses of a deceased spouse or dependent?   If you paid medical expenses for your deceased spouse or dependent, include them as medical expenses on your Form 1040 in the year paid, whether they are paid before or after the decedent's death. Www dfas mil The expenses can be included if the person was your spouse or dependent either at the time the medical services were provided or at the time you paid the expenses. Www dfas mil What Medical Expenses Are Includible? Use Table 21-1, later, as a guide to determine which medical and dental expenses you can include on Schedule A (Form 1040). Www dfas mil This table does not include all possible medical expenses. Www dfas mil To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. Www dfas mil Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Www dfas mil Medical care policies can provide payment for treatment that includes: Hospitalization, surgical services, X-rays, Prescription drugs and insulin, Dental care, Replacement of lost or damaged contact lenses, and Long-term care (subject to additional limitations). Www dfas mil See Qualified Long-Term Care Insurance Contracts in Publication 502. Www dfas mil If you have a policy that provides payments for other than medical care, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. Www dfas mil The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. Www dfas mil Note. Www dfas mil When figuring the amount of insurance premiums you can include in medical expenses on Schedule A, do not include any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Www dfas mil Also, do not include insurance premiums attributable to a nondependent child under age 27 if your premiums increased as a result of adding this child to your policy. Www dfas mil Employer-sponsored health insurance plan. Www dfas mil   Do not include in your medical and dental expenses any insurance premiums paid by an employer-sponsored health insurance plan unless the premiums are included in box 1 of your Form W-2. Www dfas mil Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included in box 1 of your Form W-2. Www dfas mil Example. Www dfas mil You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Www dfas mil Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Www dfas mil Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you cannot deduct the premiums paid with that money. Www dfas mil Long-term care services. Www dfas mil   Contributions made by your employer to provide coverage for qualified long-term care services under a flexible spending or similar arrangement must be included in your income. Www dfas mil This amount will be reported as wages in box 1 of your Form W-2. Www dfas mil Health reimbursement arrangement (HRA). Www dfas mil   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. Www dfas mil This is because an HRA is funded solely by the employer. Www dfas mil Retired public safety officers. Www dfas mil   If you are a retired public safety officer, do not include as medical expenses any health or long-term care premiums that you elected to have paid with tax-free distributions from your retirement plan. Www dfas mil This applies only to distributions that would otherwise be included in income. Www dfas mil Medicare A. Www dfas mil   If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. Www dfas mil The payroll tax paid for Medicare A is not a medical expense. Www dfas mil   If you are not covered under social security (or were not a government employee who paid Medicare tax), you can voluntarily enroll in Medicare A. Www dfas mil In this situation you can include the premiums you paid for Medicare A as a medical expense. Www dfas mil Medicare B. Www dfas mil   Medicare B is supplemental medical insurance. Www dfas mil Premiums you pay for Medicare B are a medical expense. Www dfas mil Check the information you received from the Social Security Administration to find out your premium. Www dfas mil Medicare D. Www dfas mil    Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. Www dfas mil You can include as a medical expense premiums you pay for Medicare D. Www dfas mil Prepaid insurance premiums. Www dfas mil   Premiums you pay before you are age 65 for insurance for medical care for yourself, your spouse, or your dependents after you reach age 65 are medical care expenses in the year paid if they are: Payable in equal yearly installments, or more often, and Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years). Www dfas mil Unused sick leave used to pay premiums. Www dfas mil   You must include in gross income cash payments you receive at the time of retirement for unused sick leave. Www dfas mil You also must include in gross income the value of unused sick leave that, at your option, your employer applies to the cost of your continuing participation in your employer's health plan after you retire. Www dfas mil You can include this cost of continuing participation in the health plan as a medical expense. Www dfas mil   If you participate in a health plan where your employer automatically applies the value of unused sick leave to the cost of your continuing participation in the health plan (and you do not have the option to receive cash), do not include the value of the unused sick leave in gross income. Www dfas mil You cannot include this cost of continuing participation in that health plan as a medical expense. Www dfas mil Table 21-1. Www dfas mil Medical and Dental Expenses Checklist. Www dfas mil See Publication 502 for more information about these and other expenses. Www dfas mil You can include: You cannot include: Bandages Birth control pills prescribed by your doctor Body scan Braille books Breast pump and supplies Capital expenses for equipment or improvements to your home needed for medical care (see the worksheet in Publication 502) Diagnostic devices Expenses of an organ donor Eye surgery—to promote the correct function of the eye Fertility enhancement, certain procedures Guide dogs or other animals aiding the blind, deaf, and disabled Hospital services fees (lab work, therapy, nursing services, surgery, etc. Www dfas mil ) Lead-based paint removal Legal abortion Legal operation to prevent having children such as a vasectomy or tubal ligation Long-term care contracts, qualified Meals and lodging provided by a hospital during medical treatment Medical services fees (from doctors, dentists, surgeons, specialists, and other medical practitioners) Medicare Part D premiums Medical and hospital insurance premiums Nursing services Oxygen equipment and oxygen Part of life-care fee paid to retirement home designated for medical care Physical examination Pregnancy test kit Prescription medicines (prescribed by a doctor) and insulin Psychiatric and psychological treatment Social security tax, Medicare tax, FUTA, and state employment tax for worker providing medical care (see Wages for nursing services, below) Special items (artificial limbs, false teeth, eye-glasses, contact lenses, hearing aids, crutches, wheelchair, etc. Www dfas mil ) Special education for mentally or physically disabled persons Stop-smoking programs Transportation for needed medical care Treatment at a drug or alcohol center (includes meals and lodging provided by the center) Wages for nursing services Weight-loss, certain expenses for obesity Baby sitting and childcare Bottled water Contributions to Archer MSAs (see Publication 969) Diaper service Expenses for your general health (even if following your doctor's advice) such as— —Health club dues —Household help (even if recommended by a doctor) —Social activities, such as dancing or swimming lessons —Trip for general health improvement Flexible spending account reimbursements for medical expenses (if contributions were on a pre-tax basis) Funeral, burial, or cremation expenses Health savings account payments for medical expenses Illegal operation, treatment, or medicine Life insurance or income protection policies, or policies providing payment for loss of life, limb, sight, etc. Www dfas mil Maternity clothes Medical insurance included in a car insurance policy covering all persons injured in or by your car Medicine you buy without a prescription Nursing care for a healthy baby Prescription drugs you brought in (or ordered shipped) from another country, in most cases Nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. Www dfas mil , unless recommended by a medical practitioner as a treatment for a specific medical condition diagnosed by a physician Surgery for purely cosmetic reasons Toothpaste, toiletries, cosmetics, etc. Www dfas mil Teeth whitening Weight-loss expenses not for the treatment of obesity or other disease Meals and Lodging You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to get medical care. Www dfas mil See Nursing home , later. Www dfas mil You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. Www dfas mil You can include the cost of such lodging while away from home if all of the following requirements are met. Www dfas mil The lodging is primarily for and essential to medical care. Www dfas mil The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital. Www dfas mil The lodging is not lavish or extravagant under the circumstances. Www dfas mil There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Www dfas mil The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. Www dfas mil You can include lodging for a person traveling with the person receiving the medical care. Www dfas mil For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Www dfas mil Meals are not included. Www dfas mil Nursing home. Www dfas mil   You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution, for yourself, your spouse, or your dependents. Www dfas mil This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Www dfas mil   Do not include the cost of meals and lodging if the reason for being in the home is personal. Www dfas mil You can, however, include in medical expenses the part of the cost that is for medical or nursing care. Www dfas mil Transportation Include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Www dfas mil You can include: Bus, taxi, train, or plane fares, or ambulance service, Transportation expenses of a parent who must go with a child who needs medical care, Transportation expenses of a nurse or other person who can give injections, medications, or other treatment required by a patient who is traveling to get medical care and is unable to travel alone, and Transportation expenses for regular visits to see a mentally ill dependent, if these visits are recommended as a part of treatment. Www dfas mil Car expenses. Www dfas mil   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use your car for medical reasons. Www dfas mil You cannot include depreciation, insurance, general repair, or maintenance expenses. Www dfas mil   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents per mile. Www dfas mil    You can also include parking fees and tolls. Www dfas mil You can add these fees and tolls to your medical expenses whether you use actual expenses or use the standard mileage rate. Www dfas mil Example. Www dfas mil In 2013, Bill Jones drove 2,800 miles for medical reasons. Www dfas mil He spent $500 for gas, $30 for oil, and $100 for tolls and parking. Www dfas mil He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. Www dfas mil He figures the actual expenses first. Www dfas mil He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. Www dfas mil He then figures the standard mileage amount. Www dfas mil He multiplies 2,800 miles by 24 cents a mile for a total of $672. Www dfas mil He then adds the $100 tolls and parking for a total of $772. Www dfas mil Bill includes the $772 of car expenses with his other medical expenses for the year because the $772 is more than the $630 he figured using actual expenses. Www dfas mil Transportation expenses you cannot include. Www dfas mil   You cannot include in medical expenses the cost of transportation in the following situations. Www dfas mil Going to and from work, even if your condition requires an unusual means of transportation. Www dfas mil Travel for purely personal reasons to another city for an operation or other medical care. Www dfas mil Travel that is merely for the general improvement of one's health. Www dfas mil The costs of operating a specially equipped car for other than medical reasons. Www dfas mil Disabled Dependent Care Expenses Some disabled dependent care expenses may qualify as either: Medical expenses, or Work-related expenses for purposes of taking a credit for dependent care. Www dfas mil (See chapter 32 and Publication 503, Child and Dependent Care Expenses. Www dfas mil ) You can choose to apply them either way as long as you do not use the same expenses to claim both a credit and a medical expense deduction. Www dfas mil How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the taxable year for which you received no insurance or other reimbursement. Www dfas mil Insurance Reimbursement You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. Www dfas mil This includes payments from Medicare. Www dfas mil Even if a policy provides reimbursement for only certain specific medical expenses, you must use amounts you receive from that policy to reduce your total medical expenses, including those it does not reimburse. Www dfas mil Example. Www dfas mil You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. Www dfas mil The insurance you receive for the hospital and doctors' bills is more than their charges. Www dfas mil In figuring your medical deduction, you must reduce the total amount you spent for medical care by the total amount of insurance you received, even if the policies do not cover some of your medical expenses. Www dfas mil Health reimbursement arrangement (HRA). Www dfas mil   A health reimbursement arrangement is an employer-funded plan that reimburses employees for medical care expenses and allows unused amounts to be carried forward. Www dfas mil An HRA is funded solely by the employer and the reimbursements for medical expenses, up to a maximum dollar amount for a coverage period, are not included in your income. Www dfas mil Other reimbursements. Www dfas mil   Generally, you do not reduce medical expenses by payments you receive for: Permanent loss or loss of use of a member or function of the body (loss of limb, sight, hearing, etc. Www dfas mil ) or disfigurement to the extent the payment is based on the nature of the injury without regard to the amount of time lost from work, or Loss of earnings. Www dfas mil   You must, however, reduce your medical expenses by any part of these payments that is designated for medical costs. Www dfas mil See How Do You Figure and Report the Deduction on Your Tax Return , later. Www dfas mil   For how to treat damages received for personal injury or sickness, see Damages for Personal Injuries , later. Www dfas mil You do not have a medical deduction if you are reimbursed for all of your medical expenses for the year. Www dfas mil Excess reimbursement. Www dfas mil   If you are reimbursed more than your medical expenses, you may have to include the excess in income. Www dfas mil You may want to use Figure 21-A to help you decide if any of your reimbursement is taxable. Www dfas mil Premiums paid by you. Www dfas mil   If you pay either the entire premium for your medical insurance or all of the costs of a plan similar to medical insurance and your insurance payments or other reimbursements are more than your total medical expenses for the year, you have an excess reimbursement. Www dfas mil Generally, you do not include the excess reimbursement in your gross income. Www dfas mil Premiums paid by you and your employer. Www dfas mil   If both you and your employer contribute to your medical insurance plan and your employer's contributions are not included in your gross income, you must include in your gross income the part of your excess reimbursement that is from your employer's contribution. Www dfas mil   See Publication 502 to figure the amount of the excess reimbursement you must include in gross income. Www dfas mil Reimbursement in a later year. Www dfas mil   If you are reimbursed in a later year for medical expenses you deducted in an earlier year, you generally must report the reimbursement as income up to the amount you previously deducted as medical expenses. Www dfas mil   However, do not report as income the amount of reimbursement you received up to the amount of your medical deductions that did not reduce your tax for the earlier year. Www dfas mil For more information about the recovery of an amount that you claimed as an itemized deduction in an earlier year, see Itemized Deduction Recoveries in chapter 12. Www dfas mil Figure 21-A. Www dfas mil Is Your Excess Medical Reimbursement Taxable? Please click here for the text description of the image. Www dfas mil Figure 21-A. Www dfas mil Is Your Excess Medical Reimbursement Taxable? Medical expenses not deducted. Www dfas mil   If you did not deduct a medical expense in the year you paid it because your medical expenses were not more than 10% of your AGI (7. Www dfas mil 5% of your AGI if either you or your spouse was age 65 or older), or because you did not itemize deductions, do not include the reimbursement up to the amount of the expense in income. Www dfas mil However, if the reimbursement is more than the expense, see Excess reimbursement , earlier. Www dfas mil Example. Www dfas mil For 2013, you were unmarried and under age 65 and you had medical expenses of $500. Www dfas mil You cannot deduct the $500 because it is less than 10% of your AGI. Www dfas mil If, in a later year, you are reimbursed for any of the $500 in medical expenses, you do not include the amount reimbursed in your gross income. Www dfas mil Damages for Personal Injuries If you receive an amount in settlement of a personal injury suit, part of that award may be for medical expenses that you deducted in an earlier year. Www dfas mil If it is, you must include that part in your income in the year you receive it to the extent it reduced your taxable income in the earlier year. Www dfas mil See Reimbursement in a Later Year , discussed under How Do You Treat Reimbursements, earlier. Www dfas mil Future medical expenses. Www dfas mil   If you receive an amount in settlement of a damage suit for personal injuries, part of that award may be for future medical expenses. Www dfas mil If it is, you must reduce any future medical expenses for these injuries until the amount you received has been completely used. Www dfas mil How Do You Figure and Report the Deduction on Your Tax Return? Once you have determined which medical expenses you can include, you figure and report the deduction on your tax return. Www dfas mil What Tax Form Do You Use? You figure your medical expense deduction on Schedule A (Form 1040). Www dfas mil You cannot claim medical expenses on Form 1040A or Form 1040EZ. Www dfas mil If you need more information on itemized deductions or you are not sure if you can itemize, see chapter 20. Www dfas mil Enter the amount you paid for medical and dental expenses on Schedule A (Form 1040). Www dfas mil This should be your expenses that were not reimbursed by insurance or any other sources. Www dfas mil Generally, you can deduct only the amount of your medical and dental expenses that is more than 10% of your AGI (7. Www dfas mil 5% if either you or your spouse was age 65 or older) shown on line 38, Form 1040. Www dfas mil Impairment-Related Work Expenses If you are a person with a disability, you can take a business deduction for expenses that are necessary for you to be able to work. Www dfas mil If you take a business deduction for impairment-related work expenses, do not take a medical deduction for the same expenses. Www dfas mil You have a disability if you have: A physical or mental disability (for example, blindness or deafness) that functionally limits your being employed, or A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working. Www dfas mil Impairment-related expenses defined. Www dfas mil   Impairment-related expenses are those ordinary and necessary business expenses that are: Necessary for you to do your work satisfactorily, For goods and services not required or used, other than incidentally, in your personal activities, and Not specifically covered under other income tax laws. Www dfas mil Where to report. Www dfas mil   If you are self-employed, deduct the business expenses on the appropriate form (Schedule C, C-EZ, E, or F) used to report your business income and expenses. Www dfas mil   If you are an employee, complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses. Www dfas mil Enter on Schedule A (Form 1040), that part of the amount on Form 2106, or Form 2106-EZ, that is related to your impairment. Www dfas mil Enter the amount that is unrelated to your impairment also on Schedule A (Form 1040). Www dfas mil Your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to other employee business expenses. Www dfas mil Example. Www dfas mil You are blind. Www dfas mil You must use a reader to do your work. Www dfas mil You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. Www dfas mil The reader's services are only for your work. Www dfas mil You can deduct your expenses for the reader as business expenses. Www dfas mil Health Insurance Costs for Self-Employed Persons If you were self-employed and had a net profit for the year, you may be able to deduct, as an adjustment to income, amounts paid for medical and qualified long-term care insurance on behalf of yourself, your spouse, your dependents, and, your children who were under age 27 at the end of 2013. Www dfas mil For this purpose, you were self-employed if you were a general partner (or a limited partner receiving guaranteed payments) or you received wages from an S corporation in which you were more than a 2% shareholder. Www dfas mil The insurance plan must be established under your trade or business and the deduction cannot be more than your earned income from that trade or business. Www dfas mil You cannot deduct payments for medical insurance for any month in which you were eligible to participate in a health plan subsidized by your employer, your spouse's employer, or, an employer of your dependent or your child under age 27 at the end of 2013. Www dfas mil You cannot deduct payments for a qualified long-term care insurance contract for any month in which you were eligible to participate in a long-term care insurance plan subsidized by your employer or your spouse's employer. Www dfas mil If you qualify to take the deduction, use the Self-Employed Health Insurance Deduction Worksheet in the Form 1040 instructions to figure the amount you can deduct. Www dfas mil But if any of the following applies, do not use that worksheet. Www dfas mil You had more than one source of income subject to self-employment tax. Www dfas mil You file Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion. Www dfas mil You are using amounts paid for qualified long-term care insurance to figure the deduction. Www dfas mil If you cannot use the worksheet in the Form 1040 instructions, use the worksheet in Publication 535, Business Expenses, to figure your deduction. Www dfas mil Note. Www dfas mil When figuring the amount you can deduct for insurance premiums, do not include any advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Www dfas mil If you are claiming the health coverage tax credit, subtract the amount shown on Form 8885, from the total insurance premiums you paid. Www dfas mil Do not include amounts paid for health insurance coverage with retirement plan distributions that were tax-free because you are a retired public safety officer. Www dfas mil Where to report. Www dfas mil    You take this deduction on Form 1040. Www dfas mil If you itemize your deductions and do not claim 100% of your self-employed health insurance on Form 1040, you can generally include any remaining premiums with all other medical expenses on Schedule A (Form 1040), subject to the 10% limit (7. Www dfas mil 5% if either you or your spouse was age 65 or older). Www dfas mil See Self-Employed Health Insurance Deduction in chapter 6 of Publication 535, Business Expenses, and Medical and Dental Expenses in the Instructions for Schedule A (Form 1040), for more information. Www dfas mil Prev  Up  Next   Home   More Online Publications
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Www dfas mil 11. Www dfas mil   Patient-Centered Outcomes Research Fee Table of Contents The patient-centered outcomes research fee is imposed on issuers of specified health insurance policies (section 4375) and plan sponsors of applicable self-insured health plans (section 4376) for policy and plan years ending on or after October 1, 2012. Www dfas mil Generally, references to taxes on Form 720 include this fee. Www dfas mil Specified health insurance policies. Www dfas mil   For issuers of specified health insurance policies, the fee for a policy year ending before October 1, 2013, is $1. Www dfas mil 00, multiplied by the average number of lives covered under the policy for that policy year. Www dfas mil Generally, issuers of specified health insurance polices must use one of the following four alternative methods to determine the average number of lives covered under a policy for the policy year. Www dfas mil The actual count method. Www dfas mil For policy years that end on or after October 1, 2012, issuers using the actual count method may begin counting lives covered under a policy as of May 14, 2012, rather than the first day of the policy year, and divide by the appropriate number of days remaining in the policy year. Www dfas mil The snapshot method. Www dfas mil For policy years that end on or after October 1, 2012, but that began before May 14, 2012, issuers using the snapshot method may use counts from quarters beginning on or after May 14, 2012, to determine the average number of lives covered under the policy. Www dfas mil The member months method. Www dfas mil And, 4. Www dfas mil The state form method. Www dfas mil The member months data and the data reported on state forms are based on the calendar year. Www dfas mil To adjust for 2012, issuers will use a pro rata approach for calculating the average number of lives covered using the member months method or the state form method for 2012. Www dfas mil For example, issuers using the member months number for 2012 will divide the member months number by 12 and multiply the resulting number by one quarter to arrive at the average number of lives covered for October through December 2012. Www dfas mil Applicable self-insured health plans. Www dfas mil   For plan sponsors of applicable self-insured health plans, the fee for a plan year ending on or after October 1, 2012, and ending before October 1, 2013 is $1. Www dfas mil 00, multiplied by the average number of lives covered under the plan for that plan year. Www dfas mil Generally, plan sponsors of applicable self-insured health plans must use one of the following three alternative methods to determine the average number of lives covered under a plan for the plan year. Www dfas mil Actual count method. Www dfas mil Snapshot method. Www dfas mil Form 5500 method. Www dfas mil However, for plan years beginning before July 11, 2012, and ending on or after October 1, 2012, plan sponsors may determine the average number of lives covered under the plan for the plan year using any reasonable method. Www dfas mil Reporting and paying the fee. Www dfas mil   File Form 720 annually to report and pay the fee on the second quarter Form 720, no later than July 31 of the calendar year immediately following the last day of the policy year or plan year to which the fee applies. Www dfas mil If you file Form 720 only to report the fee, do not file Form 720 for the 1st, 3rd, or 4th quarters of the year. Www dfas mil If you file Form 720 to report quarterly excise tax liability for the 1st, 3rd, or 4th quarter of the year (for example, filers reporting the foreign insurance tax (IRS No. Www dfas mil 30)), do not make an entry on the line for IRS No. Www dfas mil 133 on those filings. Www dfas mil   Deposits are not required for this fee, so issuers and plan sponsors are not required to pay the fee using Electronic Federal Tax Payment System (EFTPS). Www dfas mil   However, if the fee is paid using EFTPS, the payment should be applied to the second quarter. Www dfas mil See Electronic deposit requirement under How To Make Deposits in chapter 13, later. Www dfas mil More information. Www dfas mil   For more information, including methods for calculating the average number of lives covered, see sections 4375, 4376, and 4377; also see T. Www dfas mil D. Www dfas mil 9602, which is on page 746 of I. Www dfas mil R. Www dfas mil B. Www dfas mil 2012-52 at www. Www dfas mil irs. Www dfas mil gov/pub/irs-irbs/irb12-52. Www dfas mil pdf. Www dfas mil Prev  Up  Next   Home   More Online Publications