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Go 2011 Taxes 2013

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Go 2011 Taxes 2013

Go 2011 taxes 2013 Publication 502 - Main Content Table of Contents What Are Medical Expenses? What Expenses Can You Include This Year?Community property states. Go 2011 taxes 2013 How Much of the Expenses Can You Deduct? Whose Medical Expenses Can You Include?Spouse Dependent Decedent What Medical Expenses Are Includible?Abortion Acupuncture Alcoholism Ambulance Annual Physical Examination Artificial Limb Artificial Teeth Bandages Birth Control Pills Body Scan Braille Books and Magazines Breast Pumps and Supplies Breast Reconstruction Surgery Capital Expenses Car Chiropractor Christian Science Practitioner Contact Lenses Crutches Dental Treatment Diagnostic Devices Disabled Dependent Care Expenses Drug Addiction Drugs Eye Exam Eyeglasses Eye Surgery Fertility Enhancement Founder's Fee Guide Dog or Other Service Animal Health Institute Health Maintenance Organization (HMO) Hearing Aids Home Care Home Improvements Hospital Services Insurance Premiums Intellectually and Developmentally Disabled, Special Home for Laboratory Fees Lactation Expenses Lead-Based Paint Removal Learning Disability Legal Fees Lifetime Care—Advance Payments Lodging Long-Term Care Meals Medical Conferences Medical Information Plan Medicines Nursing Home Nursing Services Operations Optometrist Organ Donors Osteopath Oxygen Physical Examination Pregnancy Test Kit Prosthesis Psychiatric Care Psychoanalysis Psychologist Special Education Sterilization Stop-Smoking Programs Surgery Telephone Television Therapy Transplants Transportation Trips Tuition Vasectomy Vision Correction Surgery Weight-Loss Program Wheelchair Wig X-ray What Expenses Are Not Includible?Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby Controlled Substances Cosmetic Surgery Dancing Lessons Diaper Service Electrolysis or Hair Removal Flexible Spending Account Funeral Expenses Future Medical Care Hair Transplant Health Club Dues Health Coverage Tax Credit Health Savings Accounts Household Help Illegal Operations and Treatments Insurance Premiums Maternity Clothes Medical Savings Account (MSA) Medicines and Drugs From Other Countries Nonprescription Drugs and Medicines Nutritional Supplements Personal Use Items Swimming Lessons Teeth Whitening Veterinary Fees Weight-Loss Program How Do You Treat Reimbursements?Insurance Reimbursement How Do You Figure and Report the Deduction on Your Tax Return?What Tax Form Do You Use? Sale of Medical Equipment or Property Damages for Personal Injuries Impairment-Related Work Expenses Health Insurance Costs for Self-Employed Persons COBRA Premium Assistance Health Coverage Tax CreditWho Can Take This Credit? Qualifying Family Member Qualified Health Insurance Nonqualified Health Insurance Eligible Coverage Month How To Take the Credit How To Get Tax HelpLow Income Taxpayer Clinics 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. Go 2011 taxes 2013 These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. Go 2011 taxes 2013 They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. Go 2011 taxes 2013 Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. Go 2011 taxes 2013 They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract. Go 2011 taxes 2013 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. Go 2011 taxes 2013 (But see Decedent under Whose Medical Expenses Can You Include, for an exception. Go 2011 taxes 2013 ) If you pay medical expenses by check, the day you mail or deliver the check generally is the date of payment. Go 2011 taxes 2013 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. Go 2011 taxes 2013 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. Go 2011 taxes 2013 If you did not claim a medical or dental expense that would have been deductible in an earlier year, you can file Form 1040X, Amended U. Go 2011 taxes 2013 S. Go 2011 taxes 2013 Individual Income Tax Return, for the year in which you overlooked the expense. Go 2011 taxes 2013 Do not claim the expense on this year's return. Go 2011 taxes 2013 Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Go 2011 taxes 2013 You cannot include medical expenses that were paid by insurance companies or other sources. Go 2011 taxes 2013 This is true whether the payments were made directly to you, to the patient, or to the provider of the medical services. Go 2011 taxes 2013 Separate returns. Go 2011 taxes 2013   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. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Community property states. Go 2011 taxes 2013   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. Go 2011 taxes 2013 Generally, each of you should include half the expenses. Go 2011 taxes 2013 If medical expenses are paid out of the separate funds of one individual, only the individual who paid the medical expenses can include them. Go 2011 taxes 2013 If you live in a community property state and are not filing a joint return, see Publication 555, Community Property. Go 2011 taxes 2013 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. Go 2011 taxes 2013 But if either you or your spouse was born before January 2, 1949, you can deduct the amount of your medical and dental expenses that is more than 7. Go 2011 taxes 2013 5% of your AGI. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 You are unmarried and were born after January 2, 1949, and your AGI is $40,000, 10% of which is $4,000. Go 2011 taxes 2013 You paid medical expenses of $2,500. Go 2011 taxes 2013 You cannot deduct any of your medical expenses because they are not more than 10% of your AGI. Go 2011 taxes 2013 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. Go 2011 taxes 2013 There are different rules for decedents and for individuals who are the subject of multiple support agreements. Go 2011 taxes 2013 See Support claimed under a multiple support agreement , later under Qualifying Relative. Go 2011 taxes 2013 Spouse You can include medical expenses you paid for your spouse. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Example 1. Go 2011 taxes 2013 Mary received medical treatment before she married Bill. Go 2011 taxes 2013 Bill paid for the treatment after they married. Go 2011 taxes 2013 Bill can include these expenses in figuring his medical expense deduction even if Bill and Mary file separate returns. Go 2011 taxes 2013 If Mary had paid the expenses, Bill could not include Mary's expenses in his separate return. Go 2011 taxes 2013 Mary would include the amounts she paid during the year in her separate return. Go 2011 taxes 2013 If they filed a joint return, the medical expenses both paid during the year would be used to figure their medical expense deduction. Go 2011 taxes 2013 Example 2. Go 2011 taxes 2013 This year, John paid medical expenses for his wife Louise, who died last year. Go 2011 taxes 2013 John married Belle this year and they file a joint return. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Dependent You can include medical expenses you paid for your dependent. Go 2011 taxes 2013 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. Go 2011 taxes 2013 A person generally qualifies as your dependent for purposes of the medical expense deduction if both of the following requirements are met. Go 2011 taxes 2013 The person was a qualifying child (defined later) or a qualifying relative (defined later), and The person was a U. Go 2011 taxes 2013 S. Go 2011 taxes 2013 citizen or national or a resident of the United States, Canada, or Mexico. Go 2011 taxes 2013 If your qualifying child was adopted, see Exception for adopted child , later. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Exception for adopted child. Go 2011 taxes 2013   If you are a U. Go 2011 taxes 2013 S. Go 2011 taxes 2013 citizen or 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. Go 2011 taxes 2013 S. Go 2011 taxes 2013 citizen or national, or a resident of the United States, Canada, or Mexico. Go 2011 taxes 2013 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, other than to claim a refund. Go 2011 taxes 2013 Adopted child. Go 2011 taxes 2013   A legally adopted child is treated as your own child. Go 2011 taxes 2013 This child includes a child lawfully placed with you for legal adoption. Go 2011 taxes 2013   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. Go 2011 taxes 2013   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. Go 2011 taxes 2013   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. Go 2011 taxes 2013    You may be able to take a credit for other expenses related to an adoption. Go 2011 taxes 2013 See the Instructions for Form 8839, Qualified Adoption Expenses, for more information. Go 2011 taxes 2013 Child of divorced or separated parents. Go 2011 taxes 2013   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. Go 2011 taxes 2013 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. Go 2011 taxes 2013 This does not apply if the child's exemption is being claimed under a multiple support agreement (discussed later). Go 2011 taxes 2013 Qualifying Relative A qualifying relative is a person: Who is your: Son, daughter, stepchild, or 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 any 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 taxpayer for 2013, and For whom you provided over half of the support in 2013. Go 2011 taxes 2013 But see Child of divorced or separated parents , earlier, Support claimed under a multiple support agreement, next, and Kidnapped child under Qualifying Relative in Publication 501. Go 2011 taxes 2013 Support claimed under a multiple support agreement. Go 2011 taxes 2013   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. Go 2011 taxes 2013 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. Go 2011 taxes 2013   Any medical expenses paid by others who joined you in the agreement cannot be included as medical expenses by anyone. Go 2011 taxes 2013 However, you can include the entire unreimbursed amount you paid for medical expenses. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 You and your three brothers each provide one-fourth of your mother's total support. Go 2011 taxes 2013 Under a multiple support agreement, you treat your mother as your dependent. Go 2011 taxes 2013 You paid all of her medical expenses. Go 2011 taxes 2013 Your brothers repaid you for three-fourths of these expenses. Go 2011 taxes 2013 In figuring your medical expense deduction, you can include only one-fourth of your mother's medical expenses. Go 2011 taxes 2013 Your brothers cannot include any part of the expenses. Go 2011 taxes 2013 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. Go 2011 taxes 2013 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. Go 2011 taxes 2013 This includes expenses for the decedent's spouse and dependents as well as for the decedent. Go 2011 taxes 2013 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. Go 2011 taxes 2013 The expenses must be paid within the 1-year period beginning with the day after the date of death. Go 2011 taxes 2013 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. Go 2011 taxes 2013 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. Go 2011 taxes 2013 What if the decedent's return had been filed and the medical expenses were not included?   Form 1040X can be filed for the year or years the expenses are treated as paid, unless the period for filing an amended return for that year has passed. Go 2011 taxes 2013 Generally, an amended return must be filed within 3 years of the date the original return was filed, or within 2 years from the time the tax was paid, whichever date is later. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 John properly filed his 2012 income tax return. Go 2011 taxes 2013 He died in 2013 with unpaid medical expenses of $1,500 from 2012 and $1,800 in 2013. Go 2011 taxes 2013 If the expenses are paid within the 1-year period, his survivor or personal representative can file an amended return for 2012 claiming a deduction based on the $1,500 medical expenses. Go 2011 taxes 2013 The $1,800 of medical expenses from 2013 can be included on the decedent's final return for 2013. Go 2011 taxes 2013 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. Go 2011 taxes 2013 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. Go 2011 taxes 2013 What Medical Expenses Are Includible? Following is a list of items that you can include in figuring your medical expense deduction. Go 2011 taxes 2013 The items are listed in alphabetical order. Go 2011 taxes 2013 This list does not include all possible medical expenses. Go 2011 taxes 2013 To determine if an expense not listed can be included in figuring your medical expense deduction, see What Are Medical Expenses , earlier. Go 2011 taxes 2013 Abortion You can include in medical expenses the amount you pay for a legal abortion. Go 2011 taxes 2013 Acupuncture You can include in medical expenses the amount you pay for acupuncture. Go 2011 taxes 2013 Alcoholism You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for alcohol addiction. Go 2011 taxes 2013 This includes meals and lodging provided by the center during treatment. Go 2011 taxes 2013 You can also include in medical expenses amounts you pay for transportation to and from Alcoholics Anonymous meetings in your community if the attendance is pursuant to medical advice that membership in Alcoholics Anonymous is necessary for the treatment of a disease involving the excessive use of alcoholic liquors. Go 2011 taxes 2013 Ambulance You can include in medical expenses amounts you pay for ambulance service. Go 2011 taxes 2013 Annual Physical Examination See Physical Examination , later. Go 2011 taxes 2013 Artificial Limb You can include in medical expenses the amount you pay for an artificial limb. Go 2011 taxes 2013 Artificial Teeth You can include in medical expenses the amount you pay for artificial teeth. Go 2011 taxes 2013 Bandages You can include in medical expenses the cost of medical supplies such as bandages. Go 2011 taxes 2013 Birth Control Pills You can include in medical expenses the amount you pay for birth control pills prescribed by a doctor. Go 2011 taxes 2013 Body Scan You can include in medical expenses the cost of an electronic body scan. Go 2011 taxes 2013 Braille Books and Magazines You can include in medical expenses the part of the cost of Braille books and magazines for use by a visually impaired person that is more than the cost of regular printed editions. Go 2011 taxes 2013 Breast Pumps and Supplies You can include in medical expenses the cost of breast pumps and supplies that assist lactation. Go 2011 taxes 2013 Breast Reconstruction Surgery You can include in medical expenses the amounts you pay for breast reconstruction surgery, as well as breast prosthesis, following a mastectomy for cancer. Go 2011 taxes 2013 See Cosmetic Surgery , later. Go 2011 taxes 2013 Capital Expenses You can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements, if their main purpose is medical care for you, your spouse, or your dependent. Go 2011 taxes 2013 The cost of permanent improvements that increase the value of your property may be partly included as a medical expense. Go 2011 taxes 2013 The cost of the improvement is reduced by the increase in the value of your property. Go 2011 taxes 2013 The difference is a medical expense. Go 2011 taxes 2013 If the value of your property is not increased by the improvement, the entire cost is included as a medical expense. Go 2011 taxes 2013 Certain improvements made to accommodate a home to your disabled condition, or that of your spouse or your dependents who live with you, do not usually increase the value of the home and the cost can be included in full as medical expenses. Go 2011 taxes 2013 These improvements include, but are not limited to, the following items. Go 2011 taxes 2013 Constructing entrance or exit ramps for your home. Go 2011 taxes 2013 Widening doorways at entrances or exits to your home. Go 2011 taxes 2013 Widening or otherwise modifying hallways and interior doorways. Go 2011 taxes 2013 Installing railings, support bars, or other modifications to bathrooms. Go 2011 taxes 2013 Lowering or modifying kitchen cabinets and equipment. Go 2011 taxes 2013 Moving or modifying electrical outlets and fixtures. Go 2011 taxes 2013 Installing porch lifts and other forms of lifts (but elevators generally add value to the house). Go 2011 taxes 2013 Modifying fire alarms, smoke detectors, and other warning systems. Go 2011 taxes 2013 Modifying stairways. Go 2011 taxes 2013 Adding handrails or grab bars anywhere (whether or not in bathrooms). Go 2011 taxes 2013 Modifying hardware on doors. Go 2011 taxes 2013 Modifying areas in front of entrance and exit doorways. Go 2011 taxes 2013 Grading the ground to provide access to the residence. Go 2011 taxes 2013 Only reasonable costs to accommodate a home to a disabled condition are considered medical care. Go 2011 taxes 2013 Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses. Go 2011 taxes 2013 Capital expense worksheet. Go 2011 taxes 2013   Use Worksheet A to figure the amount of your capital expense to include in your medical expenses. Go 2011 taxes 2013 Worksheet A. Go 2011 taxes 2013 Capital Expense Worksheet Instructions: Use this worksheet to figure the amount, if any, of your medical expenses due to a home improvement. Go 2011 taxes 2013 1. Go 2011 taxes 2013 Enter the amount you paid for the home improvement 1. Go 2011 taxes 2013   2. Go 2011 taxes 2013 Enter the value of your home immediately after the improvement 2. Go 2011 taxes 2013       3. Go 2011 taxes 2013 Enter the value of your home immediately before the improvement 3. Go 2011 taxes 2013       4. Go 2011 taxes 2013 Subtract line 3 from line 2. Go 2011 taxes 2013 This is the increase in the value of your home due to the improvement 4. Go 2011 taxes 2013     • If line 4 is more than or equal to line 1, you have no medical expenses due to the home improvement; stop here. Go 2011 taxes 2013       • If line 4 is less than line 1, go to line 5. Go 2011 taxes 2013     5. Go 2011 taxes 2013 Subtract line 4 from line 1. Go 2011 taxes 2013 These are your medical expenses due to the home improvement 5. Go 2011 taxes 2013   Operation and upkeep. Go 2011 taxes 2013   Amounts you pay for operation and upkeep of a capital asset qualify as medical expenses, as long as the main reason for them is medical care. Go 2011 taxes 2013 This rule applies even if none or only part of the original cost of the capital asset qualified as a medical care expense. Go 2011 taxes 2013 Improvements to property rented by a person with a disability. Go 2011 taxes 2013   Amounts paid to buy and install special plumbing fixtures for a person with a disability, mainly for medical reasons, in a rented house are medical expenses. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 John has arthritis and a heart condition. Go 2011 taxes 2013 He cannot climb stairs or get into a bathtub. Go 2011 taxes 2013 On his doctor's advice, he installs a bathroom with a shower stall on the first floor of his two-story rented house. Go 2011 taxes 2013 The landlord did not pay any of the cost of buying and installing the special plumbing and did not lower the rent. Go 2011 taxes 2013 John can include in medical expenses the entire amount he paid. Go 2011 taxes 2013 Car You can include in medical expenses the cost of special hand controls and other special equipment installed in a car for the use of a person with a disability. Go 2011 taxes 2013 Special design. Go 2011 taxes 2013   You can include in medical expenses the difference between the cost of a regular car and a car specially designed to hold a wheelchair. Go 2011 taxes 2013 Cost of operation. Go 2011 taxes 2013   The includible costs of using a car for medical reasons are explained under Transportation , later. Go 2011 taxes 2013 Chiropractor You can include in medical expenses fees you pay to a chiropractor for medical care. Go 2011 taxes 2013 Christian Science Practitioner You can include in medical expenses fees you pay to Christian Science practitioners for medical care. Go 2011 taxes 2013 Contact Lenses You can include in medical expenses amounts you pay for contact lenses needed for medical reasons. Go 2011 taxes 2013 You can also include the cost of equipment and materials required for using contact lenses, such as saline solution and enzyme cleaner. Go 2011 taxes 2013 See Eyeglasses and Eye Surgery , later. Go 2011 taxes 2013 Crutches You can include in medical expenses the amount you pay to buy or rent crutches. Go 2011 taxes 2013 Dental Treatment You can include in medical expenses the amounts you pay for the prevention and alleviation of dental disease. Go 2011 taxes 2013 Preventive treatment includes the services of a dental hygienist or dentist for such procedures as teeth cleaning, the application of sealants, and fluoride treatments to prevent tooth decay. Go 2011 taxes 2013 Treatment to alleviate dental disease include services of a dentist for procedures such as X-rays, fillings, braces, extractions, dentures, and other dental ailments. Go 2011 taxes 2013 But see Teeth Whitening under What Expenses Are Not Includible, later. Go 2011 taxes 2013 Diagnostic Devices You can include in medical expenses the cost of devices used in diagnosing and treating illness and disease. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 You have diabetes and use a blood sugar test kit to monitor your blood sugar level. Go 2011 taxes 2013 You can include the cost of the blood sugar test kit in your medical expenses. Go 2011 taxes 2013 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. Go 2011 taxes 2013 (See Publication 503, Child and Dependent Care Expenses. Go 2011 taxes 2013 ) 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. Go 2011 taxes 2013 Drug Addiction You can include in medical expenses amounts you pay for an inpatient's treatment at a therapeutic center for drug addiction. Go 2011 taxes 2013 This includes meals and lodging at the center during treatment. Go 2011 taxes 2013 Drugs See Medicines , later. Go 2011 taxes 2013 Eye Exam You can include in medical expenses the amount you pay for eye examinations. Go 2011 taxes 2013 Eyeglasses You can include in medical expenses amounts you pay for eyeglasses and contact lenses needed for medical reasons. Go 2011 taxes 2013 See Contact Lenses , earlier, for more information. Go 2011 taxes 2013 Eye Surgery You can include in medical expenses the amount you pay for eye surgery to treat defective vision, such as laser eye surgery or radial keratotomy. Go 2011 taxes 2013 Fertility Enhancement You can include in medical expenses the cost of the following procedures to overcome an inability to have children. Go 2011 taxes 2013 Procedures such as in vitro fertilization (including temporary storage of eggs or sperm). Go 2011 taxes 2013 Surgery, including an operation to reverse prior surgery that prevented the person operated on from having children. Go 2011 taxes 2013 Founder's Fee See Lifetime Care—Advance Payments , later. Go 2011 taxes 2013 Guide Dog or Other Service Animal You can include in medical expenses the costs of buying, training, and maintaining a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities. Go 2011 taxes 2013 In general, this includes any costs, such as food, grooming, and veterinary care, incurred in maintaining the health and vitality of the service animal so that it may perform its duties. Go 2011 taxes 2013 Health Institute You can include in medical expenses fees you pay for treatment at a health institute only if the treatment is prescribed by a physician and the physician issues a statement that the treatment is necessary to alleviate a physical or mental defect or illness of the individual receiving the treatment. Go 2011 taxes 2013 Health Maintenance Organization (HMO) You can include in medical expenses amounts you pay to entitle you, your spouse, or a dependent to receive medical care from an HMO. Go 2011 taxes 2013 These amounts are treated as medical insurance premiums. Go 2011 taxes 2013 See Insurance Premiums , later. Go 2011 taxes 2013 Hearing Aids You can include in medical expenses the cost of a hearing aid and batteries, repairs, and maintenance needed to operate it. Go 2011 taxes 2013 Home Care See Nursing Services , later. Go 2011 taxes 2013 Home Improvements See Capital Expenses , earlier. Go 2011 taxes 2013 Hospital Services You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. Go 2011 taxes 2013 This includes amounts paid for meals and lodging. Go 2011 taxes 2013 Also see Lodging , later. Go 2011 taxes 2013 Insurance Premiums You can include in medical expenses insurance premiums you pay for policies that cover medical care. Go 2011 taxes 2013 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). Go 2011 taxes 2013 See Qualified Long-Term Care Insurance Contracts under Long-Term Care, later. Go 2011 taxes 2013 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. Go 2011 taxes 2013 The cost of the medical part must be separately stated in the insurance contract or given to you in a separate statement. Go 2011 taxes 2013 Health coverage tax credit. Go 2011 taxes 2013   If, during 2013, you were an eligible trade adjustment assistance (TAA) recipient, alternative TAA (ATAA) recipient, reemployment TAA (RTAA) recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient, you must complete Form 8885 before completing Schedule A. Go 2011 taxes 2013 When figuring the amount of insurance premiums you can deduct on Schedule A, do not include: Any amounts you included on Form 8885, Any qualified health insurance premiums you paid to “U. Go 2011 taxes 2013 S. Go 2011 taxes 2013 Treasury–HCTC,” or Any health coverage tax credit advance payments shown on Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments. Go 2011 taxes 2013 Employer-Sponsored Health Insurance Plan 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 on your Form W-2, Wage and Tax Statement. Go 2011 taxes 2013 Also, do not include any other medical and dental expenses paid by the plan unless the amount paid is included on your Form W-2. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Go 2011 taxes 2013 Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Long-term care services. Go 2011 taxes 2013   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. Go 2011 taxes 2013 This amount will be reported as wages on your Form W-2. Go 2011 taxes 2013 Retired public safety officers. Go 2011 taxes 2013   If you are a retired public safety officer, do not include as medical expenses any health or long-term care insurance premiums that you elected to have paid with tax-free distributions from a retirement plan. Go 2011 taxes 2013 This applies only to distributions that would otherwise be included in income. Go 2011 taxes 2013 Health reimbursement arrangement (HRA). Go 2011 taxes 2013   If you have medical expenses that are reimbursed by a health reimbursement arrangement, you cannot include those expenses in your medical expenses. Go 2011 taxes 2013 This is because an HRA is funded solely by the employer. Go 2011 taxes 2013 Medicare A If you are covered under social security (or if you are a government employee who paid Medicare tax), you are enrolled in Medicare A. Go 2011 taxes 2013 The payroll tax paid for Medicare A is not a medical expense. Go 2011 taxes 2013 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. Go 2011 taxes 2013 In this situation you can include the premiums you paid for Medicare A as a medical expense. Go 2011 taxes 2013 Medicare B Medicare B is a supplemental medical insurance. Go 2011 taxes 2013 Premiums you pay for Medicare B are a medical expense. Go 2011 taxes 2013 Check the information you received from the Social Security Administration to find out your premium. Go 2011 taxes 2013 Medicare D Medicare D is a voluntary prescription drug insurance program for persons with Medicare A or B. Go 2011 taxes 2013 You can include as a medical expense premiums you pay for Medicare D. Go 2011 taxes 2013 Prepaid Insurance Premiums 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). Go 2011 taxes 2013 Unused Sick Leave Used To Pay Premiums You must include in gross income cash payments you receive at the time of retirement for unused sick leave. Go 2011 taxes 2013 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. Go 2011 taxes 2013 You can include this cost of continuing participation in the health plan as a medical expense. Go 2011 taxes 2013 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. Go 2011 taxes 2013 You cannot include this cost of continuing participation in that health plan as a medical expense. Go 2011 taxes 2013 Insurance Premiums You Cannot Include You cannot include premiums you pay for: Life insurance policies, Policies providing payment for loss of earnings, Policies for loss of life, limb, sight, etc. Go 2011 taxes 2013 , Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury, The part of your car insurance that provides medical insurance coverage for all persons injured in or by your car because the part of the premium providing insurance for you, your spouse, and your dependents is not stated separately from the part of the premium providing insurance for medical care for others, or Health or long-term care insurance if you elected to pay these premiums with tax-free distributions from a retirement plan made directly to the insurance provider and these distributions would otherwise have been included in income. Go 2011 taxes 2013 Taxes imposed by any governmental unit, such as Medicare taxes, are not insurance premiums. Go 2011 taxes 2013 Coverage for nondependents. Go 2011 taxes 2013   Generally, you cannot deduct any additional premium you pay as the result of including on your policy someone who is not your spouse or dependent, even if that person is your child under age 27. Go 2011 taxes 2013 However, you can deduct the additional premium if that person is: Your child whom you do not claim as a dependent because of the rules for children of divorced or separated parents, Any person you could have claimed as a dependent on your return except that person received $3,900 or more of gross income or filed a joint return, or Any person you could have claimed as a dependent except that you, or your spouse if filing jointly, can be claimed as a dependent on someone else's 2013 return. Go 2011 taxes 2013  Also, if you had family coverage when you added this individual to your policy and your premiums did not increase, you can enter on Schedule A (Form 1040) the full amount of your medical and dental insurance premiums. Go 2011 taxes 2013 Intellectually and Developmentally Disabled, Special Home for You can include in medical expenses the cost of keeping a person who is intellectually and developmentally disabled in a special home, not the home of a relative, on the recommendation of a psychiatrist to help the person adjust from life in a mental hospital to community living. Go 2011 taxes 2013 Laboratory Fees You can include in medical expenses the amounts you pay for laboratory fees that are part of medical care. Go 2011 taxes 2013 Lactation Expenses See Breast Pumps and Supplies , earlier. Go 2011 taxes 2013 Lead-Based Paint Removal You can include in medical expenses the cost of removing lead-based paints from surfaces in your home to prevent a child who has or had lead poisoning from eating the paint. Go 2011 taxes 2013 These surfaces must be in poor repair (peeling or cracking) or within the child's reach. Go 2011 taxes 2013 The cost of repainting the scraped area is not a medical expense. Go 2011 taxes 2013 If, instead of removing the paint, you cover the area with wallboard or paneling, treat these items as capital expenses. Go 2011 taxes 2013 See Capital Expenses , earlier. Go 2011 taxes 2013 Do not include the cost of painting the wallboard as a medical expense. Go 2011 taxes 2013 Learning Disability See Special Education , later. Go 2011 taxes 2013 Legal Fees You can include in medical expenses legal fees you paid that are necessary to authorize treatment for mental illness. Go 2011 taxes 2013 However, you cannot include in medical expenses fees for the management of a guardianship estate, fees for conducting the affairs of the person being treated, or other fees that are not necessary for medical care. Go 2011 taxes 2013 Lifetime Care—Advance Payments You can include in medical expenses a part of a life-care fee or “founder's fee” you pay either monthly or as a lump sum under an agreement with a retirement home. Go 2011 taxes 2013 The part of the payment you include is the amount properly allocable to medical care. Go 2011 taxes 2013 The agreement must require that you pay a specific fee as a condition for the home's promise to provide lifetime care that includes medical care. Go 2011 taxes 2013 You can use a statement from the retirement home to prove the amount properly allocable to medical care. Go 2011 taxes 2013 The statement must be based either on the home's prior experience or on information from a comparable home. Go 2011 taxes 2013 Dependents with disabilities. Go 2011 taxes 2013   You can include in medical expenses advance payments to a private institution for lifetime care, treatment, and training of your physically or mentally impaired child upon your death or when you become unable to provide care. Go 2011 taxes 2013 The payments must be a condition for the institution's future acceptance of your child and must not be refundable. Go 2011 taxes 2013 Payments for future medical care. Go 2011 taxes 2013   Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. Go 2011 taxes 2013 This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care of the type described earlier. Go 2011 taxes 2013 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 receive medical care. Go 2011 taxes 2013 See Nursing Home , later. Go 2011 taxes 2013 You may be able to include in medical expenses the cost of lodging not provided in a hospital or similar institution. Go 2011 taxes 2013 You can include the cost of such lodging while away from home if all of the following requirements are met. Go 2011 taxes 2013 The lodging is primarily for and essential to medical care. Go 2011 taxes 2013 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. Go 2011 taxes 2013 The lodging is not lavish or extravagant under the circumstances. Go 2011 taxes 2013 There is no significant element of personal pleasure, recreation, or vacation in the travel away from home. Go 2011 taxes 2013 The amount you include in medical expenses for lodging cannot be more than $50 for each night for each person. Go 2011 taxes 2013 You can include lodging for a person traveling with the person receiving the medical care. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Meals are not included. Go 2011 taxes 2013 Do not include the cost of lodging while away from home for medical treatment if that treatment is not received from a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital or if that lodging is not primarily for or essential to the medical care received. Go 2011 taxes 2013 Long-Term Care You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts. Go 2011 taxes 2013 Qualified Long-Term Care Services Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative services, and maintenance and personal care services (defined later) that are: Required by a chronically ill individual, and Provided pursuant to a plan of care prescribed by a licensed health care practitioner. Go 2011 taxes 2013 Chronically ill individual. Go 2011 taxes 2013   An individual is chronically ill if, within the previous 12 months, a licensed health care practitioner has certified that the individual meets either of the following descriptions. Go 2011 taxes 2013 He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Go 2011 taxes 2013 Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence. Go 2011 taxes 2013 He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. Go 2011 taxes 2013 Maintenance and personal care services. Go 2011 taxes 2013    Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment). Go 2011 taxes 2013 Qualified Long-Term Care Insurance Contracts A qualified long-term care insurance contract is an insurance contract that provides only coverage of qualified long-term care services. Go 2011 taxes 2013 The contract must: Be guaranteed renewable, Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed, Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses. Go 2011 taxes 2013 The amount of qualified long-term care premiums you can include is limited. Go 2011 taxes 2013 You can include the following as medical expenses on Schedule A (Form 1040). Go 2011 taxes 2013 Qualified long-term care premiums up to the following amounts. Go 2011 taxes 2013 Age 40 or under – $360. Go 2011 taxes 2013 Age 41 to 50 – $680. Go 2011 taxes 2013 Age 51 to 60 – $1,360. Go 2011 taxes 2013 Age 61 to 70 – $3,640. Go 2011 taxes 2013 Age 71 or over – $4,550. Go 2011 taxes 2013 Unreimbursed expenses for qualified long-term care services. Go 2011 taxes 2013 Note. Go 2011 taxes 2013 The limit on premiums is for each person. Go 2011 taxes 2013 Also, if you are an eligible retired public safety officer, you cannot include premiums for long-term care insurance if you elected to pay these premiums with tax-free distributions from a qualified retirement plan made directly to the insurance provider and these distributions would otherwise have been included in your income. Go 2011 taxes 2013 Meals You can include in medical expenses the cost of meals at a hospital or similar institution if a principal reason for being there is to get medical care. Go 2011 taxes 2013 You cannot include in medical expenses the cost of meals that are not part of inpatient care. Go 2011 taxes 2013 Also see Weight-Loss Program and Nutritional Supplements , later. Go 2011 taxes 2013 Medical Conferences You can include in medical expenses amounts paid for admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent. Go 2011 taxes 2013 The costs of the medical conference must be primarily for and necessary to the medical care of you, your spouse, or your dependent. Go 2011 taxes 2013 The majority of the time spent at the conference must be spent attending sessions on medical information. Go 2011 taxes 2013 The cost of meals and lodging while attending the conference is not deductible as a medical expense. Go 2011 taxes 2013 Medical Information Plan You can include in medical expenses amounts paid to a plan that keeps medical information in a computer data bank and retrieves and furnishes the information upon request to an attending physician. Go 2011 taxes 2013 Medicines You can include in medical expenses amounts you pay for prescribed medicines and drugs. Go 2011 taxes 2013 A prescribed drug is one that requires a prescription by a doctor for its use by an individual. Go 2011 taxes 2013 You can also include amounts you pay for insulin. Go 2011 taxes 2013 Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Go 2011 taxes 2013 Imported medicines and drugs. Go 2011 taxes 2013   If you imported medicines or drugs from other countries, see Medicines and Drugs From Other Countries , under What Expenses Are Not Includible, later. Go 2011 taxes 2013 Nursing Home 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. Go 2011 taxes 2013 This includes the cost of meals and lodging in the home if a principal reason for being there is to get medical care. Go 2011 taxes 2013 Do not include the cost of meals and lodging if the reason for being in the home is personal. Go 2011 taxes 2013 You can, however, include in medical expenses the part of the cost that is for medical or nursing care. Go 2011 taxes 2013 Nursing Services You can include in medical expenses wages and other amounts you pay for nursing services. Go 2011 taxes 2013 The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. Go 2011 taxes 2013 This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. Go 2011 taxes 2013 These services can be provided in your home or another care facility. Go 2011 taxes 2013 Generally, only the amount spent for nursing services is a medical expense. Go 2011 taxes 2013 If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services. Go 2011 taxes 2013 For example, because of your medical condition you pay a visiting nurse $300 per week for medical and household services. Go 2011 taxes 2013 She spends 10% of her time doing household services such as washing dishes and laundry. Go 2011 taxes 2013 You can include only $270 per week as medical expenses. Go 2011 taxes 2013 The $30 (10% × $300) allocated to household services cannot be included. Go 2011 taxes 2013 However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Go 2011 taxes 2013 See Maintenance and personal care services under Long-Term Care, earlier. Go 2011 taxes 2013 Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. Go 2011 taxes 2013 See Publication 503. Go 2011 taxes 2013 You can also include in medical expenses part of the amount you pay for that attendant's meals. Go 2011 taxes 2013 Divide the food expense among the household members to find the cost of the attendant's food. Go 2011 taxes 2013 Then divide that cost in the same manner as in the preceding paragraph. Go 2011 taxes 2013 If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. Go 2011 taxes 2013 This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant. Go 2011 taxes 2013 Employment taxes. Go 2011 taxes 2013   You can include as a medical expense social security tax, FUTA, Medicare tax, and state employment taxes you pay for an attendant who provides medical care. Go 2011 taxes 2013 If the attendant also provides personal and household services, you can include as a medical expense only the amount of employment taxes paid for medical services as explained earlier. Go 2011 taxes 2013 For information on employment tax responsibilities of household employers, see Publication 926, Household Employer's Tax Guide. Go 2011 taxes 2013 Operations You can include in medical expenses amounts you pay for legal operations that are not for unnecessary cosmetic surgery. Go 2011 taxes 2013 See Cosmetic Surgery under What Expenses Are Not Includible, later. Go 2011 taxes 2013 Optometrist See Eyeglasses , earlier. Go 2011 taxes 2013 Organ Donors See Transplants , later. Go 2011 taxes 2013 Osteopath You can include in medical expenses amounts you pay to an osteopath for medical care. Go 2011 taxes 2013 Oxygen You can include in medical expenses amounts you pay for oxygen and oxygen equipment to relieve breathing problems caused by a medical condition. Go 2011 taxes 2013 Physical Examination You can include in medical expenses the amount you pay for an annual physical examination and diagnostic tests by a physician. Go 2011 taxes 2013 You do not have to be ill at the time of the examination. Go 2011 taxes 2013 Pregnancy Test Kit You can include in medical expenses the amount you pay to purchase a pregnancy test kit to determine if you are pregnant. Go 2011 taxes 2013 Prosthesis See Artificial Limb and Breast Reconstruction Surgery , earlier. Go 2011 taxes 2013 Psychiatric Care You can include in medical expenses amounts you pay for psychiatric care. Go 2011 taxes 2013 This includes the cost of supporting a mentally ill dependent at a specially equipped medical center where the dependent receives medical care. Go 2011 taxes 2013 See Psychoanalysis, next, and Transportation , later. Go 2011 taxes 2013 Psychoanalysis You can include in medical expenses payments for psychoanalysis. Go 2011 taxes 2013 However, you cannot include payments for psychoanalysis that is part of required training to be a psychoanalyst. Go 2011 taxes 2013 Psychologist You can include in medical expenses amounts you pay to a psychologist for medical care. Go 2011 taxes 2013 Special Education You can include in medical expenses fees you pay on a doctor's recommendation for a child's tutoring by a teacher who is specially trained and qualified to work with children who have learning disabilities caused by mental or physical impairments, including nervous system disorders. Go 2011 taxes 2013 You can include in medical expenses the cost (tuition, meals, and lodging) of attending a school that furnishes special education to help a child to overcome learning disabilities. Go 2011 taxes 2013 A doctor must recommend that the child attend the school. Go 2011 taxes 2013 Overcoming the learning disabilities must be a principal reason for attending the school, and any ordinary education received must be incidental to the special education provided. Go 2011 taxes 2013 Special education includes: Teaching Braille to a visually impaired person, Teaching lip reading to a hearing disabled person, or Giving remedial language training to correct a condition caused by a birth defect. Go 2011 taxes 2013 Sterilization You can include in medical expenses the cost of a legal sterilization (a legally performed operation to make a person unable to have children). Go 2011 taxes 2013 Also see Vasectomy , later. Go 2011 taxes 2013 Stop-Smoking Programs You can include in medical expenses amounts you pay for a program to stop smoking. Go 2011 taxes 2013 However, you cannot include in medical expenses amounts you pay for drugs that do not require a prescription, such as nicotine gum or patches, that are designed to help stop smoking. Go 2011 taxes 2013 Surgery See Operations , earlier. Go 2011 taxes 2013 Telephone You can include in medical expenses the cost of special telephone equipment that lets a person who is deaf, hard of hearing or has a speech disability communicate over a regular telephone. Go 2011 taxes 2013 This includes teletypewriter (TTY) and telecommunications device for the deaf (TDD) equipment. Go 2011 taxes 2013 You can also include the cost of repairing the equipment. Go 2011 taxes 2013 Television You can include in medical expenses the cost of equipment that displays the audio part of television programs as subtitles for persons with a hearing disability. Go 2011 taxes 2013 This may be the cost of an adapter that attaches to a regular set. Go 2011 taxes 2013 It also may be the part of the cost of a specially equipped television that exceeds the cost of the same model regular television set. Go 2011 taxes 2013 Therapy You can include in medical expenses amounts you pay for therapy received as medical treatment. Go 2011 taxes 2013 Transplants You can include in medical expenses amounts paid for medical care you receive because you are a donor or a possible donor of a kidney or other organ. Go 2011 taxes 2013 This includes transportation. Go 2011 taxes 2013 You can include any expenses you pay for the medical care of a donor in connection with the donating of an organ. Go 2011 taxes 2013 This includes transportation. Go 2011 taxes 2013 Transportation You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Car expenses. Go 2011 taxes 2013   You can include out-of-pocket expenses, such as the cost of gas and oil, when you use a car for medical reasons. Go 2011 taxes 2013 You cannot include depreciation, insurance, general repair, or maintenance expenses. Go 2011 taxes 2013   If you do not want to use your actual expenses for 2013, you can use the standard medical mileage rate of 24 cents a mile. Go 2011 taxes 2013    You can also include parking fees and tolls. Go 2011 taxes 2013 You can add these fees and tolls to your medical expenses whether you use actual expenses or the standard mileage rate. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 In 2013, Bill Jones drove 2,800 miles for medical reasons. Go 2011 taxes 2013 He spent $500 for gas, $30 for oil, and $100 for tolls and parking. Go 2011 taxes 2013 He wants to figure the amount he can include in medical expenses both ways to see which gives him the greater deduction. Go 2011 taxes 2013 He figures the actual expenses first. Go 2011 taxes 2013 He adds the $500 for gas, the $30 for oil, and the $100 for tolls and parking for a total of $630. Go 2011 taxes 2013 He then figures the standard mileage amount. Go 2011 taxes 2013 He multiplies 2,800 miles by 24 cents a mile for a total of $672. Go 2011 taxes 2013 He then adds the $100 tolls and parking for a total of $772. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Transportation expenses you cannot include. Go 2011 taxes 2013    You cannot include in medical expenses the cost of transportation in the following situations. Go 2011 taxes 2013 Going to and from work, even if your condition requires an unusual means of transportation. Go 2011 taxes 2013 Travel for purely personal reasons to another city for an operation or other medical care. Go 2011 taxes 2013 Travel that is merely for the general improvement of one's health. Go 2011 taxes 2013 The costs of operating a specially equipped car for other than medical reasons. Go 2011 taxes 2013 Trips You can include in medical expenses amounts you pay for transportation to another city if the trip is primarily for, and essential to, receiving medical services. Go 2011 taxes 2013 You may be able to include up to $50 for each night for each person. Go 2011 taxes 2013 You can include lodging for a person traveling with the person receiving the medical care. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Meals are not included. Go 2011 taxes 2013 See Lodging , earlier. Go 2011 taxes 2013 You cannot include in medical expenses a trip or vacation taken merely for a change in environment, improvement of morale, or general improvement of health, even if the trip is made on the advice of a doctor. Go 2011 taxes 2013 However, see Medical Conferences , earlier. Go 2011 taxes 2013 Tuition Under special circumstances, you can include charges for tuition in medical expenses. Go 2011 taxes 2013 See Special Education , earlier. Go 2011 taxes 2013 You can include charges for a health plan included in a lump-sum tuition fee if the charges are separately stated or can easily be obtained from the school. Go 2011 taxes 2013 Vasectomy You can include in medical expenses the amount you pay for a vasectomy. Go 2011 taxes 2013 Vision Correction Surgery See Eye Surgery , earlier. Go 2011 taxes 2013 Weight-Loss Program You can include in medical expenses amounts you pay to lose weight if it is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). Go 2011 taxes 2013 This includes fees you pay for membership in a weight reduction group as well as fees for attendance at periodic meetings. Go 2011 taxes 2013 You cannot include membership dues in a gym, health club, or spa as medical expenses, but you can include separate fees charged there for weight loss activities. Go 2011 taxes 2013 You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. Go 2011 taxes 2013 You can include the cost of special food in medical expenses only if: The food does not satisfy normal nutritional needs, The food alleviates or treats an illness, and The need for the food is substantiated by a physician. Go 2011 taxes 2013 The amount you can include in medical expenses is limited to the amount by which the cost of the special food exceeds the cost of a normal diet. Go 2011 taxes 2013 See also Weight-Loss Program under What Expenses Are Not Includible, later. Go 2011 taxes 2013 Wheelchair You can include in medical expenses amounts you pay for a wheelchair used mainly for the relief of sickness or disability, and not just to provide transportation to and from work. Go 2011 taxes 2013 The cost of operating and maintaining the wheelchair is also a medical expense. Go 2011 taxes 2013 Wig You can include in medical expenses the cost of a wig purchased upon the advice of a physician for the mental health of a patient who has lost all of his or her hair from disease. Go 2011 taxes 2013 X-ray You can include in medical expenses amounts you pay for X-rays for medical reasons. Go 2011 taxes 2013 What Expenses Are Not Includible? Following is a list of some items that you cannot include in figuring your medical expense deduction. Go 2011 taxes 2013 The items are listed in alphabetical order. Go 2011 taxes 2013 Baby Sitting, Childcare, and Nursing Services for a Normal, Healthy Baby You cannot include in medical expenses amounts you pay for the care of children, even if the expenses enable you, your spouse, or your dependent to get medical or dental treatment. Go 2011 taxes 2013 Also, any expense allowed as a childcare credit cannot be treated as an expense paid for medical care. Go 2011 taxes 2013 Controlled Substances You cannot include in medical expenses amounts you pay for controlled substances (such as marijuana, laetrile, etc. Go 2011 taxes 2013 ), even if such substances are legalized by state law. Go 2011 taxes 2013 Such substances are not legal under federal law and cannot be included in medical expenses. Go 2011 taxes 2013 Cosmetic Surgery Generally, you cannot include in medical expenses the amount you pay for unnecessary cosmetic surgery. Go 2011 taxes 2013 This includes any procedure that is directed at improving the patient's appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease. Go 2011 taxes 2013 You generally cannot include in medical expenses the amount you pay for procedures such as face lifts, hair transplants, hair removal (electrolysis), and liposuction. Go 2011 taxes 2013 You can include in medical expenses the amount you pay for cosmetic surgery if it is necessary to improve a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 An individual undergoes surgery that removes a breast as part of treatment for cancer. Go 2011 taxes 2013 She pays a surgeon to reconstruct the breast. Go 2011 taxes 2013 The surgery to reconstruct the breast corrects a deformity directly related to the disease. Go 2011 taxes 2013 The cost of the surgery is includible in her medical expenses. Go 2011 taxes 2013 Dancing Lessons You cannot include in medical expenses the cost of dancing lessons, swimming lessons, etc. Go 2011 taxes 2013 , even if they are recommended by a doctor, if they are only for the improvement of general health. Go 2011 taxes 2013 Diaper Service You cannot include in medical expenses the amount you pay for diapers or diaper services, unless they are needed to relieve the effects of a particular disease. Go 2011 taxes 2013 Electrolysis or Hair Removal See Cosmetic Surgery , earlier. Go 2011 taxes 2013 Flexible Spending Account You cannot include in medical expenses amounts for which you are fully reimbursed by your flexible spending account if you contribute a part of your income on a pre-tax basis to pay for the qualified benefit. Go 2011 taxes 2013 Funeral Expenses You cannot include in medical expenses amounts you pay for funerals. Go 2011 taxes 2013 Future Medical Care Generally, you cannot include in medical expenses current payments for medical care (including medical insurance) to be provided substantially beyond the end of the year. Go 2011 taxes 2013 This rule does not apply in situations where the future care is purchased in connection with obtaining lifetime care or long-term care of the type described at Lifetime Care—Advance Payments or Long-Term Care, earlier under What Medical Expenses Are Includible. Go 2011 taxes 2013 Hair Transplant See Cosmetic Surgery , earlier. Go 2011 taxes 2013 Health Club Dues You cannot include in medical expenses health club dues or amounts paid to improve one's general health or to relieve physical or mental discomfort not related to a particular medical condition. Go 2011 taxes 2013 You cannot include in medical expenses the cost of membership in any club organized for business, pleasure, recreation, or other social purpose. Go 2011 taxes 2013 Health Coverage Tax Credit You cannot include in medical expenses amounts you pay for health insurance that you use in figuring your health coverage tax credit. Go 2011 taxes 2013 For more information, see Health Coverage Tax Credit , later. Go 2011 taxes 2013 Health Savings Accounts You cannot include in medical expenses any payment or distribution for medical expenses out of a health savings account. Go 2011 taxes 2013 Contributions to health savings accounts are deducted separately. Go 2011 taxes 2013 See Publication 969. Go 2011 taxes 2013 Household Help You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. Go 2011 taxes 2013 This is a personal expense that is not deductible. Go 2011 taxes 2013 However, you may be able to include certain expenses paid to a person providing nursing-type services. Go 2011 taxes 2013 For more information, see Nursing Services , earlier under What Medical Expenses Are Includible. Go 2011 taxes 2013 Also, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. Go 2011 taxes 2013 For more information, see Long-Term Care , earlier under What Medical Expenses Are Includible. Go 2011 taxes 2013 Illegal Operations and Treatments You cannot include in medical expenses amounts you pay for illegal operations, treatments, or controlled substances whether rendered or prescribed by licensed or unlicensed practitioners. Go 2011 taxes 2013 Insurance Premiums See Insurance Premiums under What Medical Expenses Are Includible, earlier. Go 2011 taxes 2013 Maternity Clothes You cannot include in medical expenses amounts you pay for maternity clothes. Go 2011 taxes 2013 Medical Savings Account (MSA) You cannot include in medical expenses amounts you contribute to an Archer MSA. Go 2011 taxes 2013 You cannot include expenses you pay for with a tax-free distribution from your Archer MSA. Go 2011 taxes 2013 You also cannot use other funds equal to the amount of the distribution and include the expenses. Go 2011 taxes 2013 For more information on Archer MSAs, see Publication 969. Go 2011 taxes 2013 Medicines and Drugs From Other Countries In general, you cannot include in your medical expenses the cost of a prescribed drug brought in (or ordered shipped) from another country. Go 2011 taxes 2013 You can only include the cost of a drug that was imported legally. Go 2011 taxes 2013 For example, you can include the cost of a prescribed drug the Food and Drug Administration announces can be legally imported by individuals. Go 2011 taxes 2013 You can include the cost of a prescribed drug you purchase and consume in another country if the drug is legal in both the other country and the United States. Go 2011 taxes 2013 Nonprescription Drugs and Medicines Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 Your doctor recommends that you take aspirin. Go 2011 taxes 2013 Because aspirin is a drug that does not require a physician's prescription, you cannot include its cost in your medical expenses. Go 2011 taxes 2013 Nutritional Supplements You cannot include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. Go 2011 taxes 2013 unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. Go 2011 taxes 2013 Otherwise, these items are taken to maintain your ordinary good health, and are not for medical care. Go 2011 taxes 2013 Personal Use Items You cannot include in medical expenses the cost of an item ordinarily used for personal, living, or family purposes unless it is used primarily to prevent or alleviate a physical or mental defect or illness. Go 2011 taxes 2013 For example, the cost of a toothbrush and toothpaste is a nondeductible personal expense. Go 2011 taxes 2013 In order to accommodate an individual with a physical defect, you may have to purchase an item ordinarily used as a personal, living, or family item in a special form. Go 2011 taxes 2013 You can include the excess of the cost of the item in a special form over the cost of the item in normal form as a medical expense. Go 2011 taxes 2013 (See Braille Books and Magazines under What Medical Expenses Are Includible, earlier. Go 2011 taxes 2013 ) Swimming Lessons See Dancing Lessons , earlier. Go 2011 taxes 2013 Teeth Whitening You cannot include in medical expenses amounts paid to whiten teeth. Go 2011 taxes 2013 See Cosmetic Surgery , earlier. Go 2011 taxes 2013 Veterinary Fees You generally cannot include veterinary fees in your medical expenses, but see Guide Dog or Other Service Animal under What Medical Expenses Are Includible, earlier. Go 2011 taxes 2013 Weight-Loss Program You cannot include in medical expenses the cost of a weight-loss program if the purpose of the weight loss is the improvement of appearance, general health, or sense of well-being. Go 2011 taxes 2013 You cannot include amounts you pay to lose weight unless the weight loss is a treatment for a specific disease diagnosed by a physician (such as obesity, hypertension, or heart disease). Go 2011 taxes 2013 If the weight-loss treatment is not for a specific disease diagnosed by a physician, you cannot include either the fees you pay for membership in a weight reduction group or fees for attendance at periodic meetings. Go 2011 taxes 2013 Also, you cannot include membership dues in a gym, health club, or spa. Go 2011 taxes 2013 You cannot include the cost of diet food or beverages in medical expenses because the diet food and beverages substitute for what is normally consumed to satisfy nutritional needs. Go 2011 taxes 2013 See Weight-Loss Program under What Medical Expenses Are Includible, earlier. Go 2011 taxes 2013 How Do You Treat Reimbursements? You can include in medical expenses only those amounts paid during the tax year for which you received no insurance or other reimbursement. Go 2011 taxes 2013 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. Go 2011 taxes 2013 This includes payments from Medicare. Go 2011 taxes 2013 Even if a policy provides reimbursement only for 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. Go 2011 taxes 2013 Example. Go 2011 taxes 2013 You have insurance policies that cover your hospital and doctors' bills but not your nursing bills. Go 2011 taxes 2013 The insurance you receive for the hospital and doctors' bills is more than their charges. Go 2011 taxes 2013 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. Go 2011 taxes 2013 Health reimbursement arrange
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The Go 2011 Taxes 2013

Go 2011 taxes 2013 3. Go 2011 taxes 2013   Savings Incentive Match Plans for Employees (SIMPLE) Table of Contents Introduction What Is a SIMPLE Plan?Eligible Employees How Are Contributions Made? How Much Can Be Contributed on Your Behalf?Matching contributions less than 3%. Go 2011 taxes 2013 Traditional IRA mistakenly moved to SIMPLE IRA. Go 2011 taxes 2013 When Can You Withdraw or Use Assets?Are Distributions Taxable? Introduction This chapter is for employees who need information about savings incentive match plans for employees (SIMPLE plans). Go 2011 taxes 2013 It explains what a SIMPLE plan is, contributions to a SIMPLE plan, and distributions from a SIMPLE plan. Go 2011 taxes 2013 Under a SIMPLE plan, SIMPLE retirement accounts for participating employees can be set up either as: Part of a 401(k) plan, or A plan using IRAs (SIMPLE IRA). Go 2011 taxes 2013 This chapter only discusses the SIMPLE plan rules that relate to SIMPLE IRAs. Go 2011 taxes 2013 See chapter 3 of Publication 560 for information on any special rules for SIMPLE plans that do not use IRAs. Go 2011 taxes 2013 If your employer maintains a SIMPLE plan, you must be notified, in writing, that you can choose the financial institution that will serve as trustee for your SIMPLE IRA and that you can roll over or transfer your SIMPLE IRA to another financial institution. Go 2011 taxes 2013 See Rollovers and Transfers Exception, later under When Can You Withdraw or Use Assets. Go 2011 taxes 2013 What Is a SIMPLE Plan? A SIMPLE plan is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. Go 2011 taxes 2013 See chapter 3 of Publication 560 for information on the requirements employers must satisfy to set up a SIMPLE plan. Go 2011 taxes 2013 A SIMPLE plan is a written agreement (salary reduction agreement) between you and your employer that allows you, if you are an eligible employee (including a self-employed individual), to choose to: Reduce your compensation (salary) by a certain percentage each pay period, and Have your employer contribute the salary reductions to a SIMPLE IRA on your behalf. Go 2011 taxes 2013 These contributions are called salary reduction contributions. Go 2011 taxes 2013 All contributions under a SIMPLE IRA plan must be made to SIMPLE IRAs, not to any other type of IRA. Go 2011 taxes 2013 The SIMPLE IRA can be an individual retirement account or an individual retirement annuity, described in chapter 1. Go 2011 taxes 2013 Contributions are made on behalf of eligible employees. Go 2011 taxes 2013 (See Eligible Employees below. Go 2011 taxes 2013 ) Contributions are also subject to various limits. Go 2011 taxes 2013 (See How Much Can Be Contributed on Your Behalf , later. Go 2011 taxes 2013 ) In addition to salary reduction contributions, your employer must make either matching contributions or nonelective contributions. Go 2011 taxes 2013 See How Are Contributions Made , later. Go 2011 taxes 2013 You may be able to claim a credit for contributions to your SIMPLE plan. Go 2011 taxes 2013 For more information, see chapter 4. Go 2011 taxes 2013 Eligible Employees You must be allowed to participate in your employer's SIMPLE plan if you: Received at least $5,000 in compensation from your employer during any 2 years prior to the current year, and Are reasonably expected to receive at least $5,000 in compensation during the calendar year for which contributions are made. Go 2011 taxes 2013 Self-employed individual. Go 2011 taxes 2013   For SIMPLE plan purposes, the term employee includes a self-employed individual who received earned income. Go 2011 taxes 2013 Excludable employees. Go 2011 taxes 2013   Your employer can exclude the following employees from participating in the SIMPLE plan. Go 2011 taxes 2013 Employees whose retirement benefits are covered by a collective bargaining agreement (union contract). Go 2011 taxes 2013 Employees who are nonresident aliens and received no earned income from sources within the United States. Go 2011 taxes 2013 Employees who would not have been eligible employees if an acquisition, disposition, or similar transaction had not occurred during the year. Go 2011 taxes 2013 Compensation. Go 2011 taxes 2013   For purposes of the SIMPLE plan rules, your compensation for a year generally includes the following amounts. Go 2011 taxes 2013 Wages, tips, and other pay from your employer that is subject to income tax withholding. Go 2011 taxes 2013 Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457) plans, SEP plans, and SIMPLE plans. Go 2011 taxes 2013 Self-employed individual compensation. Go 2011 taxes 2013   For purposes of the SIMPLE plan rules, if you are self-employed, your compensation for a year is your net earnings from self-employment (Schedule SE (Form 1040), Section A, line 4, or Section B, line 6) before subtracting any contributions made to a SIMPLE IRA on your behalf. Go 2011 taxes 2013   For these purposes, net earnings from self-employment include services performed while claiming exemption from self-employment tax as a member of a group conscientiously opposed to social security benefits. Go 2011 taxes 2013 How Are Contributions Made? Contributions under a salary reduction agreement are called salary reduction contributions. Go 2011 taxes 2013 They are made on your behalf by your employer. Go 2011 taxes 2013 Your employer must also make either matching contributions or nonelective contributions. Go 2011 taxes 2013 Salary reduction contributions. Go 2011 taxes 2013   During the 60-day period before the beginning of any year, and during the 60-day period before you are eligible, you can choose salary reduction contributions expressed either as a percentage of compensation, or as a specific dollar amount (if your employer offers this choice). Go 2011 taxes 2013 You can choose to cancel the election at any time during the year. Go 2011 taxes 2013   Salary reduction contributions are also referred to as “elective deferrals. Go 2011 taxes 2013 ”   Your employer cannot place restrictions on the contributions amount (such as by limiting the contributions percentage), except to comply with the salary reduction contributions limit, discussed under How Much Can Be Contributed on Your Behalf, later. Go 2011 taxes 2013 Matching contributions. Go 2011 taxes 2013   Unless your employer chooses to make nonelective contributions, your employer must make contributions equal to the salary reduction contributions you choose (elect), but only up to certain limits. Go 2011 taxes 2013 See How Much Can Be Contributed on Your Behalf below. Go 2011 taxes 2013 These contributions are in addition to the salary reduction contributions and must be made to the SIMPLE IRAs of all eligible employees (defined earlier) who chose salary reductions. Go 2011 taxes 2013 These contributions are referred to as matching contributions. Go 2011 taxes 2013   Matching contributions on behalf of a self-employed individual are not treated as salary reduction contributions. Go 2011 taxes 2013 Nonelective contributions. Go 2011 taxes 2013   Instead of making matching contributions, your employer may be able to choose to make nonelective contributions on behalf of all eligible employees. Go 2011 taxes 2013 These nonelective contributions must be made on behalf of each eligible employee who has at least $5,000 of compensation from your employer, whether or not the employee chose salary reductions. Go 2011 taxes 2013   One of the requirements your employer must satisfy is notifying the employees that the election was made. Go 2011 taxes 2013 For other requirements that your employer must satisfy, see chapter 3 of Publication 560. Go 2011 taxes 2013 How Much Can Be Contributed on Your Behalf? The limits on contributions to a SIMPLE IRA vary with the type of contribution that is made. Go 2011 taxes 2013 Salary reduction contributions limit. Go 2011 taxes 2013   Salary reduction contributions (employee-chosen contributions or elective deferrals) that your employer can make on your behalf under a SIMPLE plan are limited to $12,000 for 2013. Go 2011 taxes 2013 The limitation remains at $12,000 for 2014. Go 2011 taxes 2013 If you are a participant in any other employer plans during 2013 and you have elective salary reductions or deferred compensation under those plans, the salary reduction contributions under the SIMPLE plan also are included in the annual limit of $17,500 for 2013 on exclusions of salary reductions and other elective deferrals. Go 2011 taxes 2013 You, not your employer, are responsible for monitoring compliance with these limits. Go 2011 taxes 2013 Additional elective deferrals can be contributed to your SIMPLE plan if: You reached age 50 by the end of 2013, and No other elective deferrals can be made for you to the plan for the year because of limits or restrictions, such as the regular annual limit. Go 2011 taxes 2013 The most that can be contributed in additional elective deferrals to your SIMPLE plan is the lesser of the following two amounts. Go 2011 taxes 2013 $2,500 for 2013, or Your compensation for the year reduced by your other elective deferrals for the year. Go 2011 taxes 2013 The additional deferrals are not subject to any other contribution limit and are not taken into account in applying other contribution limits. Go 2011 taxes 2013 The additional deferrals are not subject to the nondiscrimination rules as long as all eligible participants are allowed to make them. Go 2011 taxes 2013 Matching employer contributions limit. Go 2011 taxes 2013   Generally, your employer must make matching contributions to your SIMPLE IRA in an amount equal to your salary reduction contributions. Go 2011 taxes 2013 These matching contributions cannot be more than 3% of your compensation for the calendar year. Go 2011 taxes 2013 See Matching contributions less than 3% below. Go 2011 taxes 2013 Example 1. Go 2011 taxes 2013 In 2013, Joshua was a participant in his employer's SIMPLE plan. Go 2011 taxes 2013 His compensation, before SIMPLE plan contributions, was $41,600 ($800 per week). Go 2011 taxes 2013 Instead of taking it all in cash, Joshua elected to have 12. Go 2011 taxes 2013 5% of his weekly pay ($100) contributed to his SIMPLE IRA. Go 2011 taxes 2013 For the full year, Joshua's salary reduction contributions were $5,200, which is less than the $12,000 limit on these contributions. Go 2011 taxes 2013 Under the plan, Joshua's employer was required to make matching contributions to Joshua's SIMPLE IRA. Go 2011 taxes 2013 Because his employer's matching contributions must equal Joshua's salary reductions, but cannot be more than 3% of his compensation (before salary reductions) for the year, his employer's matching contribution was limited to $1,248 (3% of $41,600). Go 2011 taxes 2013 Example 2. Go 2011 taxes 2013 Assume the same facts as in Example 1 , except that Joshua's compensation for the year was $408,163 and he chose to have 2. Go 2011 taxes 2013 94% of his weekly pay contributed to his SIMPLE IRA. Go 2011 taxes 2013 In this example, Joshua's salary reduction contributions for the year (2. Go 2011 taxes 2013 94% × $408,163) were equal to the 2013 limit for salary reduction contributions ($12,000). Go 2011 taxes 2013 Because 3% of Joshua's compensation ($12,245) is more than the amount his employer was required to match ($12,000), his employer's matching contributions were limited to $12,000. Go 2011 taxes 2013 In this example, total contributions made on Joshua's behalf for the year were $24,000 ($12,000 (Joshua's contributions) + $12,000 (matching contributions)), the maximum contributions permitted under a SIMPLE IRA for 2013. Go 2011 taxes 2013 Matching contributions less than 3%. Go 2011 taxes 2013   Your employer can reduce the 3% limit on matching contributions for a calendar year, but only if: The limit is not reduced below 1%, The limit is not reduced for more than 2 years out of the 5-year period that ends with (and includes) the year for which the election is effective, and Employees are notified of the reduced limit within a reasonable period of time before the 60-day election period during which they can enter into salary reduction agreements. Go 2011 taxes 2013   For purposes of applying the rule in item (2) in determining whether the limit was reduced below 3% for the year, any year before the first year in which your employer (or a former employer) maintains a SIMPLE IRA plan will be treated as a year for which the limit was 3%. Go 2011 taxes 2013 If your employer chooses to make nonelective contributions for a year, that year also will be treated as a year for which the limit was 3%. Go 2011 taxes 2013 Nonelective employer contributions limit. Go 2011 taxes 2013   If your employer chooses to make nonelective contributions, instead of matching contributions, to each eligible employee's SIMPLE IRA, contributions must be 2% of your compensation for the entire year. Go 2011 taxes 2013 For 2013, only $255,000 of your compensation can be taken into account to figure the contribution limit. Go 2011 taxes 2013   Your employer can substitute the 2% nonelective contribution for the matching contribution for a year if both of the following requirements are met. Go 2011 taxes 2013 Eligible employees are notified that a 2% nonelective contribution will be made instead of a matching contribution. Go 2011 taxes 2013 This notice is provided within a reasonable period during which employees can enter into salary reduction agreements. Go 2011 taxes 2013 Example 3. Go 2011 taxes 2013 Assume the same facts as in Example 2 , except that Joshua's employer chose to make nonelective contributions instead of matching contributions. Go 2011 taxes 2013 Because his employer's nonelective contributions are limited to 2% of up to $255,000 of Joshua's compensation, his employer's contribution to Joshua's SIMPLE IRA was limited to $5,100. Go 2011 taxes 2013 In this example, total contributions made on Joshua's behalf for the year were $17,100 (Joshua's salary reductions of $12,000 plus his employer's contribution of $5,100). Go 2011 taxes 2013 Traditional IRA mistakenly moved to SIMPLE IRA. Go 2011 taxes 2013   If you mistakenly roll over or transfer an amount from a traditional IRA to a SIMPLE IRA, you can later recharacterize the amount as a contribution to another traditional IRA. Go 2011 taxes 2013 For more information, see Recharacterizations in chapter 1. Go 2011 taxes 2013 Recharacterizing employer contributions. Go 2011 taxes 2013   You cannot recharacterize employer contributions (including elective deferrals) under a SEP or SIMPLE plan as contributions to another IRA. Go 2011 taxes 2013 SEPs are discussed in chapter 2 of Publication 560. Go 2011 taxes 2013 SIMPLE plans are discussed in this chapter. Go 2011 taxes 2013 Converting from a SIMPLE IRA. Go 2011 taxes 2013   Generally, you can convert an amount in your SIMPLE IRA to a Roth IRA under the same rules explained in chapter 1 under Converting From Any Traditional IRA Into a Roth IRA . Go 2011 taxes 2013    However, you cannot convert any amount distributed from the SIMPLE IRA during the 2-year period beginning on the date you first participated in any SIMPLE IRA plan maintained by your employer. Go 2011 taxes 2013 When Can You Withdraw or Use Assets? Generally, the same distribution (withdrawal) rules that apply to traditional IRAs apply to SIMPLE IRAs. Go 2011 taxes 2013 These rules are discussed in chapter 1. Go 2011 taxes 2013 Your employer cannot restrict you from taking distributions from a SIMPLE IRA. Go 2011 taxes 2013 Are Distributions Taxable? Generally, distributions from a SIMPLE IRA are fully taxable as ordinary income. Go 2011 taxes 2013 If the distribution is an early distribution (discussed in chapter 1), it may be subject to the additional tax on early distributions. Go 2011 taxes 2013 See Additional Tax on Early Distributions, later. Go 2011 taxes 2013 Rollovers and Transfers Exception Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. Go 2011 taxes 2013 Two-year rule. Go 2011 taxes 2013   To qualify as a tax-free rollover (or a tax-free trustee-to-trustee transfer), a rollover distribution (or a transfer) made from a SIMPLE IRA during the 2-year period beginning on the date on which you first participated in your employer's SIMPLE plan must be contributed (or transferred) to another SIMPLE IRA. Go 2011 taxes 2013 The 2-year period begins on the first day on which contributions made by your employer are deposited in your SIMPLE IRA. Go 2011 taxes 2013   After the 2-year period, amounts in a SIMPLE IRA can be rolled over or transferred tax free to an IRA other than a SIMPLE IRA, or to a qualified plan, a tax-sheltered annuity plan (section 403(b) plan), or deferred compensation plan of a state or local government (section 457 plan). Go 2011 taxes 2013 Additional Tax on Early Distributions The additional tax on early distributions (discussed in chapter 1) applies to SIMPLE IRAs. Go 2011 taxes 2013 If a distribution is an early distribution and occurs during the 2-year period following the date on which you first participated in your employer's SIMPLE plan, the additional tax on early distributions is increased from 10% to 25%. Go 2011 taxes 2013 If a rollover distribution (or transfer) from a SIMPLE IRA does not satisfy the 2-year rule, and is otherwise an early distribution, the additional tax imposed because of the early distribution is increased from 10% to 25% of the amount distributed. 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