Latest news with #Grzes
Mint
16 hours ago
- Business
- Mint
A health crisis cost you a bundle. How to claw it back.
The medical tax deduction comes into play after a health crisis like a car accident or a cancer diagnosis, allowing you to write off some unreimbursed costs. Taxes aren't a priority when you are facing a health crisis. But once you recover, don't miss a valuable tax break called the medical tax deduction that could alleviate the emergency's financial toll—an oversight that happens all too often. Taxpayers 50 and over missed out on almost 40% in savings from this deduction, a recent analysis found. Nearly one in five failed to deduct $4,714 on average. Americans undergoing a major medical event or relying on assisted care at home or in a facility should put the deduction on their radar, tax experts say. Keeping detailed records through the year is key. 'Make sure you've got proof of payment for any out-of-pocket cost, everything to support that deduction," said Henry Grzes, lead manager for tax practice and ethics with the American Institute of CPAs. Taxpayers are allowed to deduct unreimbursed medical expenses for themselves, their spouse or their dependents if the costs total more than 7.5% of their adjusted gross income, or AGI. Only medical costs above that 7.5% threshold are deductible. For instance, if your AGI is $100,000, then 7.5% of that is $7,500. If your out-of-pocket medical costs total $7,000, nothing is deductible. But if those expenses added up to $12,000, then $4,500 of that can be written off. You must itemize to receive the benefit. 'If you choose the standard deduction, you don't get anything," Grzes said. Older households deduct about a quarter of their medical spending, the study last year found. That is just half of the medical costs eligible for the deduction. The analysis was based on data before the standard deduction was doubled in 2018, which could make the medical expense deduction less attractive. But out-of-pocket spending has jumped since the end of the pandemic and aging boomers are entering their costliest health years, potentially making the deduction beneficial for more taxpayers. One reason why people fail to take the deduction is because its benefit doesn't seem large enough to justify the work that goes into claiming it. 'It's more for people where it seems there's a higher return to claiming it, say, because you live in a high tax state," said Gopi Shah Goda, author of the study and a senior fellow at Brookings Institution. 'So for every dollar you deduct, you get a higher share of that dollar back in tax savings." Other folks aren't aware of the deduction or how to use it. Generally, taxpayers are often on 'autopilot," said Andy Phillips, vice president at the Tax Institute at H&R Block. There are various times when you should consider the deduction. The most obvious is after a catastrophic health event, such as a car accident or a cancer diagnosis. You can write off unreimbursed costs related to your hospital stay, follow-up doctor or treatment visits, and rehab or physical therapy. If you need to modify your home to accommodate a wheelchair, whatever isn't reimbursed can also be deducted. 'Same thing with transportation. You get a rate per mile," Grzes said. 'Say you're in a small rural community and you have to go to the Cleveland Clinic for some special treatment, that would be deductible." Another time to consider the deduction is if you or your spouse rely on assisted care, whether in home or at a facility. If a full-care facility is required for health reasons, its full cost, including meals and transportation, would be eligible for the deduction. If health isn't the primary reason you are living in an assisted-care home, then only the medical component of those costs are deductible. The facility itself typically provides a breakdown of what charges are attributed to medical care, Grze said. A taxpayer who teeters between itemizing and taking the standard deduction from year to year may want to check out the medical expense deduction. Adding in eligible medical costs to other deductions—like charitable donations or mortgage interest—may make itemizing the better option. Married couples who typically file jointly might find the deduction worthwhile if one spouse earns a lot less than the other, Phillips said. If the lower-earning spouse has large unreimbursed medical expenses during the year, filing separately as a married couple may be beneficial. 'This one is tricky, it's not one to do in a vacuum," he said. 'The challenge is you've got to run the math both ways." The biggest hassle to taking the deduction is to make sure you have the documentation to back it up. This can become complicated because your insurance may pick up some of those medical bills. Only the uncovered portion is deductible. Typically insurers send an explanation of benefits showing how much was charged by the medical provider, how much the insurer paid, and the amount you must pay. Keep that along with a receipt, bank or credit-card statement showing you paid that out-of-pocket amount. If you have a regular accountant, contact him or her after the medical event. Your accountant can help plan for the next tax season and advise what documents to send. If you do your taxes yourself you may want to seek out an accountant for a midyear consultation on how your medical expenses may affect your taxes. Phillips said: 'Don't leave it to chance." Write to editors@
The Hill
13-04-2025
- Business
- The Hill
Tax tips for recently married couples and first-time parents
NEW YORK (AP) — Taxes may not be the first thing on your mind when you celebrate a joyous occasion like a marriage or a new baby. But once you return from your honeymoon or while your newborn is napping, you'll need to spend some time thinking about them. Keeping your documents organized, updating your withholding and knowing which tax credits you're eligible for are some crucial steps as couples and parents navigate tax season, said Henry Grzes, lead manager of tax practice & ethics for the American Institute of CPAs. The deadline to file your 2024 taxes is Tuesday. If you run out of time, you can file for an extension until Oct. 15. Here are some expert recommendations if you are filing taxes as a newlywed or new parent. Keep things organized Keeping your tax documents organized is a great practice regardless of your filing year. Having your tax documents in a folder on your personal computer, even if it's pictures of the documents, can help you have everything in the same place, said Tyler Horn, a certified financial planner and head of planning at Origin, a financial planning app. 'Just take a picture with your phone, send it and keep it in that secure folder on your computer. That way you have everything together,' Horn said. It's also good to keep your records for the future. The IRS recommends that you keep your documents for at least three years and up to seven depending on your situation. Update your last name if you changed it If you changed your last name, you will need to make sure your government documents reflect this. Your tax return must match your Social Security number so, if you choose to change your name, you'll need to make a change with the Social Security Administration. Oftentimes, people forget to make this change ahead of time, which leads them to make mistakes on their tax returns. 'That's something that people don't necessarily think about and when they do think about it sometimes it's it's too late,' Grzes said. You can find out more about how to change your name on the Social Security Administration's website. Choose whether to file jointly or separately One of the biggest changes, for tax purposes, when you get married is whether you choose to file your taxes jointly or separately, Horn said. To make this decision, each couple should take a look at their specific situation. In most cases, filing jointly might make the most sense but it's not always that case, Horn said. One of the benefits of filing jointly is that it gives you access to new tax credits and deductions. It's important to know that if a couple is married as of Dec. 31, the law indicates that the couple was married for the entire year, Grzes said. So, if you got married in the summer, in the eyes of the IRS you have been married the full year. You can read more about each filing status on the IRS website. Update your W-4 form If you're planning to file taxes jointly with your spouse, you must update your W-4 form with your employer. Updating your W-4 is meant to reflect your new filing status, from single to married, as well as updating your tax withholding. Know the available tax credits and deductions Knowing what tax credits and deductions you qualify for is very important when filing your taxes, Horn said. Relevant tax credits for married couples include the Earned Income, American Opportunity and Lifetime Learning tax credits. When it comes to deductions, you can either opt for a standard deduction or itemize. Itemizing generally only makes sense if your itemized deductions add up to more than the current standard deduction of $29,200 for a married couple. In some cases, a person that qualifies for the Earned Income Credit as a single filer will no longer qualify if they file jointly with their spouse, Grzes said. To avoid surprises when you're filing your taxes, Grzes recommends that you work with a tax professional ahead of time. Obtain a social security number for your child It's important that you obtain a social security number for your child as soon as you can, Grzes said. The first time you file taxes after you've had your new baby, you will be able to apply for several new tax credits, but you can only do so if you claim them as a dependent. 'If you're going to claim your child as a dependent, you have to have a Social Security number and put that number on the return. Otherwise, the IRS is going to deny you,' Grzes said. Usually, hospitals let you apply for a Social Security number registration. However, you can also apply online or at your local Social Security office. Tax credits for parents To alleviate some of the expenses of having children, the IRS offers several tax credits, including the Child Tax Credit, Childcare Credit and Adoption Credit. Parents also continue to qualify for the Earned Income Credit, which will continue to be based on your earned income and the number of children you have. 'The Earned Income Credit clearly provides a significant refund and by having a child, you could increase the amount of income that you could earn and still qualify for that credit,' Grzes said. Other tax benefits Parents can benefit from opening tax-free accounts such as a flexible spending account or a 529 account. A flexible spending account (FSA), allows you to set aside pre-tax dollars to pay for healthcare and childcare costs, while the 529 account lets you set money aside for education expenses. 'It's worth making sure you are maximizing your tax opportunities,' Grzes said. ___ The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Yahoo
13-04-2025
- Business
- Yahoo
Tax tips for recently married couples and first-time parents
NEW YORK (AP) — Taxes may not be the first thing on your mind when you celebrate a joyous occasion like a marriage or a new baby. But once you return from your honeymoon or while your newborn is napping, you'll need to spend some time thinking about them. Keeping your documents organized, updating your withholding and knowing which tax credits you're eligible for are some crucial steps as couples and parents navigate tax season, said Henry Grzes, lead manager of tax practice & ethics for the American Institute of CPAs. The deadline to file your 2024 taxes is Tuesday. If you run out of time, you can file for an extension until Oct. 15. Here are some expert recommendations if you are filing taxes as a newlywed or new parent. Keep things organized Keeping your tax documents organized is a great practice regardless of your filing year. Having your tax documents in a folder on your personal computer, even if it's pictures of the documents, can help you have everything in the same place, said Tyler Horn, a certified financial planner and head of planning at Origin, a financial planning app. 'Just take a picture with your phone, send it and keep it in that secure folder on your computer. That way you have everything together,' Horn said. It's also good to keep your records for the future. The IRS recommends that you keep your documents for at least three years and up to seven depending on your situation. Update your last name if you changed it If you changed your last name, you will need to make sure your government documents reflect this. Your tax return must match your Social Security number so, if you choose to change your name, you'll need to make a change with the Social Security Administration. Oftentimes, people forget to make this change ahead of time, which leads them to make mistakes on their tax returns. 'That's something that people don't necessarily think about and when they do think about it sometimes it's it's too late,' Grzes said. You can find out more about how to change your name on the Social Security Administration's website. Choose whether to file jointly or separately One of the biggest changes, for tax purposes, when you get married is whether you choose to file your taxes jointly or separately, Horn said. To make this decision, each couple should take a look at their specific situation. In most cases, filing jointly might make the most sense but it's not always that case, Horn said. One of the benefits of filing jointly is that it gives you access to new tax credits and deductions. It's important to know that if a couple is married as of Dec. 31, the law indicates that the couple was married for the entire year, Grzes said. So, if you got married in the summer, in the eyes of the IRS you have been married the full year. You can read more about each filing status on the IRS website. Update your W-4 form If you're planning to file taxes jointly with your spouse, you must update your W-4 form with your employer. Updating your W-4 is meant to reflect your new filing status, from single to married, as well as updating your tax withholding. Know the available tax credits and deductions Knowing what tax credits and deductions you qualify for is very important when filing your taxes, Horn said. Relevant tax credits for married couples include the Earned Income, American Opportunity and Lifetime Learning tax credits. When it comes to deductions, you can either opt for a standard deduction or itemize. Itemizing generally only makes sense if your itemized deductions add up to more than the current standard deduction of $29,200 for a married couple. In some cases, a person that qualifies for the Earned Income Credit as a single filer will no longer qualify if they file jointly with their spouse, Grzes said. To avoid surprises when you're filing your taxes, Grzes recommends that you work with a tax professional ahead of time. Obtain a social security number for your child It's important that you obtain a social security number for your child as soon as you can, Grzes said. The first time you file taxes after you've had your new baby, you will be able to apply for several new tax credits, but you can only do so if you claim them as a dependent. 'If you're going to claim your child as a dependent, you have to have a Social Security number and put that number on the return. Otherwise, the IRS is going to deny you," Grzes said. Usually, hospitals let you apply for a Social Security number registration. However, you can also apply online or at your local Social Security office. Tax credits for parents To alleviate some of the expenses of having children, the IRS offers several tax credits, including the Child Tax Credit, Childcare Credit and Adoption Credit. Parents also continue to qualify for the Earned Income Credit, which will continue to be based on your earned income and the number of children you have. 'The Earned Income Credit clearly provides a significant refund and by having a child, you could increase the amount of income that you could earn and still qualify for that credit,' Grzes said. Other tax benefits Parents can benefit from opening tax-free accounts such as a flexible spending account or a 529 account. A flexible spending account (FSA), allows you to set aside pre-tax dollars to pay for healthcare and childcare costs, while the 529 account lets you set money aside for education expenses. 'It's worth making sure you are maximizing your tax opportunities,' Grzes said. ___ The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Associated Press
13-04-2025
- Business
- Associated Press
Tax tips for recently married couples and first-time parents
NEW YORK (AP) — Taxes may not be the first thing on your mind when you celebrate a joyous occasion like a marriage or a new baby. But once you return from your honeymoon or while your newborn is napping, you'll need to spend some time thinking about them. Keeping your documents organized, updating your withholding and knowing which tax credits you're eligible for are some crucial steps as couples and parents navigate tax season, said Henry Grzes, lead manager of tax practice & ethics for the American Institute of CPAs. The deadline to file your 2024 taxes is Tuesday. If you run out of time, you can file for an extension until Oct. 15. Here are some expert recommendations if you are filing taxes as a newlywed or new parent. Keep things organized Keeping your tax documents organized is a great practice regardless of your filing year. Having your tax documents in a folder on your personal computer, even if it's pictures of the documents, can help you have everything in the same place, said Tyler Horn, a certified financial planner and head of planning at Origin, a financial planning app. 'Just take a picture with your phone, send it and keep it in that secure folder on your computer. That way you have everything together,' Horn said. It's also good to keep your records for the future. The IRS recommends that you keep your documents for at least three years and up to seven depending on your situation. Update your last name if you changed it If you changed your last name, you will need to make sure your government documents reflect this. Your tax return must match your Social Security number so, if you choose to change your name, you'll need to make a change with the Social Security Administration. Oftentimes, people forget to make this change ahead of time, which leads them to make mistakes on their tax returns. 'That's something that people don't necessarily think about and when they do think about it sometimes it's it's too late,' Grzes said. You can find out more about how to change your name on the Social Security Administration's website. Choose whether to file jointly or separately One of the biggest changes, for tax purposes, when you get married is whether you choose to file your taxes jointly or separately, Horn said. To make this decision, each couple should take a look at their specific situation. In most cases, filing jointly might make the most sense but it's not always that case, Horn said. One of the benefits of filing jointly is that it gives you access to new tax credits and deductions. It's important to know that if a couple is married as of Dec. 31, the law indicates that the couple was married for the entire year, Grzes said. So, if you got married in the summer, in the eyes of the IRS you have been married the full year. You can read more about each filing status on the IRS website. Update your W-4 form If you're planning to file taxes jointly with your spouse, you must update your W-4 form with your employer. Updating your W-4 is meant to reflect your new filing status, from single to married, as well as updating your tax withholding. Know the available tax credits and deductions Knowing what tax credits and deductions you qualify for is very important when filing your taxes, Horn said. Relevant tax credits for married couples include the Earned Income, American Opportunity and Lifetime Learning tax credits. When it comes to deductions, you can either opt for a standard deduction or itemize. Itemizing generally only makes sense if your itemized deductions add up to more than the current standard deduction of $29,200 for a married couple. In some cases, a person that qualifies for the Earned Income Credit as a single filer will no longer qualify if they file jointly with their spouse, Grzes said. To avoid surprises when you're filing your taxes, Grzes recommends that you work with a tax professional ahead of time. Obtain a social security number for your child It's important that you obtain a social security number for your child as soon as you can, Grzes said. The first time you file taxes after you've had your new baby, you will be able to apply for several new tax credits, but you can only do so if you claim them as a dependent. 'If you're going to claim your child as a dependent, you have to have a Social Security number and put that number on the return. Otherwise, the IRS is going to deny you,' Grzes said. Usually, hospitals let you apply for a Social Security number registration. However, you can also apply online or at your local Social Security office. Tax credits for parents To alleviate some of the expenses of having children, the IRS offers several tax credits, including the Child Tax Credit, Childcare Credit and Adoption Credit. Parents also continue to qualify for the Earned Income Credit, which will continue to be based on your earned income and the number of children you have. 'The Earned Income Credit clearly provides a significant refund and by having a child, you could increase the amount of income that you could earn and still qualify for that credit,' Grzes said. Other tax benefits Parents can benefit from opening tax-free accounts such as a flexible spending account or a 529 account. A flexible spending account (FSA), allows you to set aside pre-tax dollars to pay for healthcare and childcare costs, while the 529 account lets you set money aside for education expenses. 'It's worth making sure you are maximizing your tax opportunities,' Grzes said. ___ The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
