We have medical expenses that we can either pay in monthly installments or a lump sum. If we pay the lump sum, it will put us over the 10% of adjusted gross income to be able to deduct. My question is this, will the amount deducted be a $1 to$1 on our return? So if we exceed 10% of AGI by $1200, would we be getting $1200 more in our return? if it is not a $1 to$1, what is the exchange rate?
No it is not 1 to 1 refund. Itemize deductions are subtracted from your AGI and reduce the income that is taxable.
If you are able to itemize (meaning all your itemized deductions are more than the standard deduction) you just get a percentage of your deductions back. Like if you are in the 25% tax bracket for a $100 deduction you will get $25. It isn't added on to your refund. Deductions reduce your income so you get taxed on a lower amount.
Plus TurboTax starts off using the Standard deduction, so until your Itemized Deductions are higher than the Standard deduction your refund would not change. Or it will just change a little at a time as you increase your deductions over the standard amount.
For 2017 the standard deduction amounts are:
Single 6,350 + 1,550 for 65 and over
HOH 9,350 + 1,550 for 65 and over
Joint 12,700 + 1,250 for each 65 and over
Married filing Separate 6,350 + 1,250 for 65 and over
No it is not 1 to 1 refund. Itemize deductions are subtracted from your AGI and reduce the income that is taxable.
If you are able to itemize (meaning all your itemized deductions are more than the standard deduction) you just get a percentage of your deductions back. Like if you are in the 25% tax bracket for a $100 deduction you will get $25. It isn't added on to your refund. Deductions reduce your income so you get taxed on a lower amount.
Plus TurboTax starts off using the Standard deduction, so until your Itemized Deductions are higher than the Standard deduction your refund would not change. Or it will just change a little at a time as you increase your deductions over the standard amount.
For 2017 the standard deduction amounts are:
Single 6,350 + 1,550 for 65 and over
HOH 9,350 + 1,550 for 65 and over
Joint 12,700 + 1,250 for each 65 and over
Married filing Separate 6,350 + 1,250 for 65 and over