Take full advantage of medical deduction while you still can

Take full advantage of medical deduction while you still can

The cost of medical and dental care is typically the largest expense for older Americans. Fortunately, some of these bills may be tax-deductible.

The 2016 tax year could be the last time adults age 65 and older can take advantage of a lower threshold for deducting a portion of your medical and dental expenses.

If you itemize your deductions on Schedule A of your tax return, among the categories to list are medical and dental expenses. However, they are subject to a limit.

For many years, the limit was 7.5 percent of a taxpayer’s adjusted gross income, meaning that only those medical expenses in excess of 7.5 percent of a taxpayer’s AGI were deductible. For example, if someone’s AGI was $40,000, only those medical and dental expenses that exceeded $3,000 (7.5 percent times $40,000 equal $3,000) would be deductible.

But the rules for deducting medical and dental expenses changed in 2013, increasing that threshold to 10 percent of AGI.

Seniors got a brief reprieve as Congress exempted people age 65 and older from the 10 percent threshold until 2017. 

Financial help on the way for low-income seniors

There are new resources available in our community for adults age 55 and older who are struggling financially.

Surprisingly, the current federal poverty guideline (an individual making $29,425 or less or a couple earning less than $39,825) does not reflect healthcare costs. If it did, the older adult poverty rate would be considerably higher. Increased medical costs for older adults greatly reduce the income available to meet food and housing needs.

Special challenges exist for low-income adults in different age groups. The 55-to-64 age group faces one set of hurdles, while those 65 and older face another set.

Those 55 to 64 need to work but often face longer periods of joblessness and have less of a chance of finding a job than their higher-income peers. Their limited budgets are stretched even further by expenditures on healthcare,

Identity theft hits home

Who would have thought my parents would become the victims of identity theft?

Not long ago, my parents received a letter from the FBI informing them their Medicare Advantage Plan insurance company had been hacked, and names, Social Security numbers and other personal information had been compromised.

I was so skeptical of this letter that I asked Judy Christman Yates, criminologist and coordinator of the Ventura County Financial Abuse Specialist Team, to see if it was authentic.

She said it appeared to be.

According to the letter, while the FBI did not know which members’ information had been affected, they suggested everyone who received the letter perform a credit check.

My parents sailed along for a few months with no issues. Their credit report looked normal.

Then one day last week my mother received a call from Schwab

Seniors struggle financially

financial insecurityToday’s news stories speak volumes. Seniors struggle to make ends meet . . . more elderly find they can’t afford not to work . . . baby boomers are forced to support parents. A growing number of seniors are struggling financially. Forced to choose between meals and medications, homeowners insurance and healthcare, or cable and paid care—in Ventura County alone, a whopping 39 percent of seniors don’t have enough retirement income to adequately meet their basic needs, according to the Elder Index. I think most of us know that the difference between the poverty level and the true cost of basic needs in California is dramatic. Federal poverty guidelines for a single senior renter in Ventura County is approximately $12,000 in gross annual income, and for a senior couple with a mortgage, that level is under $16,000. But according to the Elder Index, established in 2010 by the UCLA Center for Community Economic Development, the real cost of living for a single senior renter is $24,000...

When seniors need help managing finances

For the past eight years Shirley, age 77, has been handling the family finances for herself and her husband Joe. A former CPA, Joe had handled the couple’s money, but the tremors from his Parkinson’s restricted his ability to write checks or use online banking and the mild dementia Joe experiences left him confused with the daily details of managing finances. Recently, Shirley shared with her best friend that she was feeling stressed about handling the couple’s financial affairs. The couple’s CDs were maturing and Shirley didn’t have a good idea of how or where to invest the proceeds. She was also having difficulty deciphering their medical insurance statements. In the past if she had questions Shirley would call her nephew, but he’d recently moved out of the area. She figured she needed some help soon, before she made some irreversible mistakes. Shirley is representative of the 29 percent of seniors (studies vary) who require assistance handling their money and financial...

Stay up-to-date on Medicare changes

Senior-woman-confused-365rr021810A recent study says that more than half of seniors over age 60 find Medicare confusing or don’t understand it at all Boomers are nervous, indifferent or uneducated about Medicare. Ten thousand boomers a day are eligible for Medicare, the largest growth ever in the history of the program. A recent study by United Healthcare and the National Council on Aging says that more than half of seniors over age 60 find Medicare confusing or they don’t understand it at all. Most respondents were not able to accurately identify what each part of Medicare covers. Only a third correctly identified Part A as helping to cover hospital care. Less than a quarter knew that Part B helps to cover doctor visits. More than two-thirds did not know that Part C offers an all-in-one program that helps cover hospital care, doctor visits and prescription drugs. And half had not heard of the “doughnut hole” in Part D prescription drug coverage. Nineteen percent of those enrolled in the program did...

Expect penalties if not enrolled in Medicare at 65

ComputerMany people consider April 15th the date to remember. We have to be on our toes at tax time because a late return could result in a penalty. As the first of the baby boomers turn 65 next year, Medicare will present them with new dates to remember and another set of penalties if they’re not on their toes. At a recent presentation of Medicare coverage choices, I watched the audience sit openmouthed in disbelief as they were told that not signing up for Medicare within the appropriate window could result in penalties for the lifetime of their coverage.So in the spirit of spreading the news to boomers nearing 65 who are overloaded with news and information, here are the simple facts about Medicare penalties. There are two main choices for coverage: Medicare Part A (hospital insurance) and Medicare Part B (medical insurance). Medicare Part A is free for most enrollees, so everyone is encouraged to sign up. There is a seven-month window for enrolling: three months before your...

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