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mm154
New Member

What is 7.5% of gross income $66,042?

My husband is paying $ $7434 a year for medicare.(he does not have social security)Our gross income is 66,042. How much we can deduct and where to write if any?
4 Replies
macuser_22
Level 15

What is 7.5% of gross income $66,042?

7.5 % of  $66,042 is $4,953.    Only medical expenses MORE that that are deductible , but only if you can otherwise itemize and all itemized deductions are more that the standard deduction which for Joint is $24,800.

 

Very few taxpayers can itemize anymore.

 

 

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
xmasbaby0
Level 15

What is 7.5% of gross income $66,042?

If you enter all of the out of pocket medical expenses the software will do all of those calculations for you---you do not have to calculate it yourself.   All you need to do is enter the amount paid for the insurance in Medical Expenses and let TT figure it out for you.

 

MEDICAL EXPENSES

The medical expense deduction has to meet a rather large threshold before it can affect your return. The amount of medical (including dental, vision, etc.)  expenses that will count toward itemization is the amount that is OVER 7.5% of your adjusted gross income. You should only enter the amount that you paid in 2020—do not include any amounts that were covered by insurance or that are still outstanding.  Of course, your medical expenses plus your other itemized deductions still have to exceed your standard deduction before you will see a difference in your tax due or refund.

To enter your medical expenses go to Federal>Deductions and Credits>Medical>Medical Expenses

 

 

 

 

If you just want to understand the way it is calculated:

 

 

Your AGI is $66,042   so figure .075  x 66042   = 4953.15    

 

The amount of expenses that "might" be deductible with an AGI of $66,042 will be the expenses that are MORE than the amount of $4953.15.    

 

So if his insurance is $7434      Subtract 7434 - 4953.15   =   $2480.85   

 

The amount that might be deductible as a medical expense is $2480.85

 

Remember that itemized deductions have to exceed your standard deduction or they have no effect.

 

 

STANDARD DEDUCTION

Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns.  The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.

 

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund.  The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting  tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts)   The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you.  Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

 

Your standard deduction lowers your taxable income.  It is not a refund.  You will see your standard or itemized deduction amount on line 12 of your 2020 Form 1040.

 

 

2020 Standard Deduction Amounts

 

Single $12,400   (+ $1650 65 or older)

Married Filing Separate  $12,400   (+ $1300 if 65 or older)

Married Filing Jointly $24,800   (+ $1300 for each spouse 65 or older)

Head of Household $18,650  (+ $1650 for 65 or older)

 

 

In other words---unless you have some other big ticket deductions like mortgage interest or property tax that will get your itemized deductions past your standard deduction, the medical expense makes no difference.

 

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
mm154
New Member

What is 7.5% of gross income $66,042?

We are claiming Standard deduction.

Thank you anyhow!

mm154
New Member

What is 7.5% of gross income $66,042?

Very precise explanation.

Thank you very much!

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