Medical expense deduction documentation

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tj-longterm
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Joined: Tue Apr 10, 2007 10:10 am

Medical expense deduction documentation

Post by tj-longterm » Fri Sep 13, 2019 5:56 pm

I'm planning to claim a large amount of medical expenses for 2018 (we haven't filed yet, just the extension), because we spent a ton on medical care that year (unfortunately). We exceed the standard deduction and the minimum medical expense amount with our deductions.

However, these medical expenses take the form of well over 100 EOBs. I have the individual EOB for each one of them (that's in fact how I calculated how much the insurance companies didn't reimburse and we paid), but I'm wondering if that's enough in an audit.

What if I saved our bank and credit card statements for the year as well? Or do I need to gather the receipts from the providers themselves (this will be a task, but not impossible I guess)?

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cheese_breath
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Re: Medical expense deduction documentation

Post by cheese_breath » Fri Sep 13, 2019 6:05 pm

tj-longterm wrote:
Fri Sep 13, 2019 5:56 pm
I'm planning to claim a large amount of medical expenses for 2018 (we haven't filed yet, just the extension), because we spent a ton on medical care that year (unfortunately). We exceed the standard deduction and the minimum medical expense amount with our deductions.

However, these medical expenses take the form of well over 100 EOBs. I have the individual EOB for each one of them (that's in fact how I calculated how much the insurance companies didn't reimburse and we paid), but I'm wondering if that's enough in an audit.

What if I saved our bank and credit card statements for the year as well? Or do I need to gather the receipts from the providers themselves (this will be a task, but not impossible I guess)?
The main thing is to be able you paid. Bank and credit card statements should be acceptable. Just make sure they match what you're claiming.
The surest way to know the future is when it becomes the past.

Mr. Rumples
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Re: Medical expense deduction documentation

Post by Mr. Rumples » Fri Sep 13, 2019 6:17 pm

Last year might be the last year I itemize my medical. I keep the EOB's, the credit card statements since that's how I pay and at the end of the year I get a statement from each provider. In Virginia, don't know about other states, a medical provider is required by law to provide an account statement up to three times a year to the patient at no charge (they can charge for copies of medical records). When I request the statement, they are use to it from other patients so I've never had an issue. Remember that your travel expenses are also deductible as are something things not covered by insurance.

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Duckie
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Re: Medical expense deduction documentation

Post by Duckie » Fri Sep 13, 2019 6:22 pm

tj-longterm wrote:However, these medical expenses take the form of well over 100 EOBs. I have the individual EOB for each one of them (that's in fact how I calculated how much the insurance companies didn't reimburse and we paid), but I'm wondering if that's enough in an audit.

What if I saved our bank and credit card statements for the year as well? Or do I need to gather the receipts from the providers themselves (this will be a task, but not impossible I guess)?
In an audit you need to prove that you had the medical expenses and that you paid them. So save the EOBs and bank/credit card statements.

Momus
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Re: Medical expense deduction documentation

Post by Momus » Fri Sep 13, 2019 7:32 pm

You need to exceed 10% gross to even deduct anything. Most people here will have income 100k-1M+/yr.

Say 150k income, anything over 15k is deductible. So if you have 20k in medical expenses, only 5k is deductible for tax purpose. No way I'll reach paying out of pocket cost for over 15k... I threw away all my medical or pharmacy receipts. Useless. Maybe when I'm old :|

sawhorse
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Re: Medical expense deduction documentation

Post by sawhorse » Fri Sep 13, 2019 11:20 pm

Momus wrote:
Fri Sep 13, 2019 7:32 pm
You need to exceed 10% gross to even deduct anything. Most people here will have income 100k-1M+/yr.

Say 150k income, anything over 15k is deductible. So if you have 20k in medical expenses, only 5k is deductible for tax purpose. No way I'll reach paying out of pocket cost for over 15k... I threw away all my medical or pharmacy receipts. Useless. Maybe when I'm old :|
Lucky you. $130k income here and have enough medical expenses to make it worthwhile to deduct. One year it was almost $50k. I'm in my mid-30s. I would keep those receipts in case. You never know if you'll be hit by huge bills before the end of the year.

To the OP, save all your receipts and also make note of transportation. If you travel further for medical care, also keep track of lodging expenses. Lodging expenses are only deductible up to $50 per person per night. Food is not deductible.

Credit card statements are insufficient if they audit you. You'll need to have receipts.

jj
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Location: Texas

Re: Medical expense deduction documentation

Post by jj » Sat Sep 14, 2019 4:39 pm

Momus wrote:
Fri Sep 13, 2019 7:32 pm
You need to exceed 10% gross to even deduct anything. Most people here will have income 100k-1M+/yr.

Say 150k income, anything over 15k is deductible. So if you have 20k in medical expenses, only 5k is deductible for tax purpose. No way I'll reach paying out of pocket cost for over 15k... I threw away all my medical or pharmacy receipts. Useless. Maybe when I'm old :|
For 2018, it's still 7.5% for the medical deduction, it goes to 10% for 2019.

I would never throw away medical receipts before the end of the year, you never know if you might need them.

In any event, we have HSA accounts but thus far have not claimed anything from them as every year since we've had them our medical/dental/ortho/vision/medical mileage expenses have been above the threshold for claiming the medical deduction. Un-subsidized ACA-conforming policies are very expensive. Plus braces, tooth implants, a small medical procedure coupled with a high deductible - first world problems, I know, but medical expenses can soon get north of $40k. 2019 may be the first year that we don't claim the medical deduction.

As for putting the detailed documentation together in case we are audited, I keep all receipts for a number of years and if I get a letter from the IRS I'll deal with the detail then.
...it is madness to risk losing what you need in pursuing what you simply desire. Warren E. Buffett

Momus
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Re: Medical expense deduction documentation

Post by Momus » Sat Sep 14, 2019 5:33 pm

jj wrote:
Sat Sep 14, 2019 4:39 pm
Momus wrote:
Fri Sep 13, 2019 7:32 pm
You need to exceed 10% gross to even deduct anything. Most people here will have income 100k-1M+/yr.

Say 150k income, anything over 15k is deductible. So if you have 20k in medical expenses, only 5k is deductible for tax purpose. No way I'll reach paying out of pocket cost for over 15k... I threw away all my medical or pharmacy receipts. Useless. Maybe when I'm old :|
For 2018, it's still 7.5% for the medical deduction, it goes to 10% for 2019.

I would never throw away medical receipts before the end of the year, you never know if you might need them.

In any event, we have HSA accounts but thus far have not claimed anything from them as every year since we've had them our medical/dental/ortho/vision/medical mileage expenses have been above the threshold for claiming the medical deduction. Un-subsidized ACA-conforming policies are very expensive. Plus braces, tooth implants, a small medical procedure coupled with a high deductible - first world problems, I know, but medical expenses can soon get north of $40k. 2019 may be the first year that we don't claim the medical deduction.

As for putting the detailed documentation together in case we are audited, I keep all receipts for a number of years and if I get a letter from the IRS I'll deal with the detail then.
I haven't spent more than $4k ever in health care. One time charge. Most years, it has always been less than $500. Doesn't even take any maintenance medicine. One time charge was also because I chose to have the elective procedure. I'm blessed with good health I guess.

Jinxing myself...

jj
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Location: Texas

Re: Medical expense deduction documentation

Post by jj » Sat Sep 14, 2019 5:43 pm

Momus wrote:
Sat Sep 14, 2019 5:33 pm

Jinxing myself...
Long may your good health continue... :)
...it is madness to risk losing what you need in pursuing what you simply desire. Warren E. Buffett

sport
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Re: Medical expense deduction documentation

Post by sport » Sat Sep 14, 2019 5:53 pm

I keep a spreadsheet with all medical and dental expenses. I also have the EOB and dental bills to back them up. If there is ever a question, I will provide the spread sheet and anything else as needed.

RudyS
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Re: Medical expense deduction documentation

Post by RudyS » Sat Sep 14, 2019 9:08 pm

I imagine those affected mostly know this, but anyone in a continuing care retirement community (CCRC) with a lifecare contract, can deduct a portion of the entrance fee and monthly fees. The portion of those fees that are considered a prepaid medical expense by the IRS (see Pub 502) should be provided each year to the residents by management. That will easily bring someone over the standard deduction especially onc charity, and taxes, are also added.

MikeG62
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Location: New Jersey

Re: Medical expense deduction documentation

Post by MikeG62 » Sun Sep 15, 2019 11:22 am

Duckie wrote:
Fri Sep 13, 2019 6:22 pm
tj-longterm wrote:However, these medical expenses take the form of well over 100 EOBs. I have the individual EOB for each one of them (that's in fact how I calculated how much the insurance companies didn't reimburse and we paid), but I'm wondering if that's enough in an audit.

What if I saved our bank and credit card statements for the year as well? Or do I need to gather the receipts from the providers themselves (this will be a task, but not impossible I guess)?
In an audit you need to prove that you had the medical expenses and that you paid them. So save the EOBs and bank/credit card statements.
This is what I have done.
Real Knowledge Comes Only From Experience

jebmke
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Re: Medical expense deduction documentation

Post by jebmke » Sun Sep 15, 2019 11:42 am

Mr. Rumples wrote:
Fri Sep 13, 2019 6:17 pm
In Virginia, don't know about other states, a medical provider is required by law to provide an account statement up to three times a year to the patient at no charge (they can charge for copies of medical records). When I request the statement, they are use to it from other patients so I've never had an issue. Remember that your travel expenses are also deductible as are something things not covered by insurance.
I don't know what the law requires in Maryland but I have never had a provider refuse to provide me an annual statement. These cover most of the items I reimburse from our HSAs. Many major pharmacies will provide the statement online - I know CVS does.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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cheese_breath
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Re: Medical expense deduction documentation

Post by cheese_breath » Sun Sep 15, 2019 11:53 am

jj wrote:
Sat Sep 14, 2019 4:39 pm
As for putting the detailed documentation together in case we are audited, I keep all receipts for a number of years and if I get a letter from the IRS I'll deal with the detail then.
To each his own I guess. Like sport, I keep a spreadsheet of all my medical expenses and add new expenses as they occur. I also have the backup documents organized by type (EOBs, receipts, Part D statements, etc.) I hope I'll never need any of this, but if I do I'd rather have it ready than trying to pull it together while the IRS is waiting.

(*) My spreadsheet also contains all my other deductions and income.
The surest way to know the future is when it becomes the past.

aida2003
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Re: Medical expense deduction documentation

Post by aida2003 » Sun Sep 15, 2019 6:35 pm

sawhorse wrote:
Fri Sep 13, 2019 11:20 pm
Momus wrote:
Fri Sep 13, 2019 7:32 pm
You need to exceed 10% gross to even deduct anything. Most people here will have income 100k-1M+/yr.

Say 150k income, anything over 15k is deductible. So if you have 20k in medical expenses, only 5k is deductible for tax purpose. No way I'll reach paying out of pocket cost for over 15k... I threw away all my medical or pharmacy receipts. Useless. Maybe when I'm old :|
Lucky you. $130k income here and have enough medical expenses to make it worthwhile to deduct. One year it was almost $50k. I'm in my mid-30s. I would keep those receipts in case. You never know if you'll be hit by huge bills before the end of the year.

To the OP, save all your receipts and also make note of transportation. If you travel further for medical care, also keep track of lodging expenses. Lodging expenses are only deductible up to $50 per person per night. Food is not deductible.
Credit card statements are insufficient if they audit you. You'll need to have receipts.
It's so scary to read stories of people paying so much OOP beyond the max OOP on their insurance. Something wrong with the healthcare insurance in this country.

miamivice
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Re: Medical expense deduction documentation

Post by miamivice » Sun Sep 15, 2019 6:40 pm

To answer the OPs question, in my opinion I would save the EOBs only. If an audit happened, I would present the EOBs to the auditor. If they for some reason needed the bank statements to prove that each bill was paid, I would then (but only then) gather up the bank statements. No reason to create a ton of paperwork that isn't being requested at the current time.

As long as your claims are honest, which I am assuming they are, there is no reason the IRS wouldn't give you enough time to pull in more records if the EOBs were not sufficient.

In the digital world that we live in today, records are easy to obtain. No need to invest time now for things that may not be needed.

trueblueky
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Re: Medical expense deduction documentation

Post by trueblueky » Sun Sep 15, 2019 8:30 pm

Remember that your health insurance and LTC insurance (up to a point, based on age) may be deductible too. Those could total thousands of dollars.

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