Daniel Stewart

How Your Healthcare Can Impact Your Taxes

It wasn't always the case, but modern healthcare and taxes often go hand in hand. Your income directly affects your eligibility for health insurance, and you may even have the opportunity to deduct certain healthcare costs. If you would like to know more about healthcare and taxes, visit this website.

Here are a few ways that your healthcare for the year can impact your tax obligations.

Tax Deductions

Deductions are one of the most significant ways healthcare costs can influence your taxes. The IRS allows taxpayers to deduct qualified medical care expenses from their taxable income. But, there are some limitations.

First, you can only deduct unreimbursed expenses. That means no double-dipping to get back more than you already did. Secondly, taxpayers can only deduct those expenses if it exceeds 7.5 percent of their adjusted gross income.

Medical expense deductions are complicated, so getting help from a tax professional is important. They require itemization through Schedule A rather than taking the standard deduction.

Health Insurance

If you purchase health insurance through the Marketplace, your taxes determine your eligibility for a premium tax credit. Depending on your income, you may receive a credit that helps you pay for premiums. This amount is reflected on form 1095-A, and you can choose how much of it you use.

Remember, however, that you may have to reconcile the tax credit if you earned more than you initially projected.

HSAs, FSAs, and Other Tax-Advantages Accounts

Finally, there are tax-advantaged accounts. One of the most popular is a Health Savings Account (HSA). With an HSA, you can make contributions up to the annual limit and use those funds to pay for qualified medical expenses.

The amount you deposit is not subject to federal income tax. In fact, it can reduce your taxable income, lowering your tax burden.

Those are just a few ways that healthcare and taxes intertwine. Recent changes to tax law have made healthcare and insurance a significant factor in tax obligations. New programs are making it easier for Americans to manage their healthcare costs. Whether through tax deductions or premium tax credits, the information you file with the IRS makes a difference.

Author Resource:-

Daniel Stewart has been helping people with their money management and personal finance with over 15 years' experience in business finance. You can find his thoughts at health investment blog.