Q&A of the Week - July 1, 2020

The medical expenses may be deductible if you itemize and if they are greater than 10% of your AGI. 

In 2019, the IRS allows all taxpayers to deduct the total qualified unreimbursed medical care expenses for the year that exceeds 7.5% of their adjusted gross income. 

Beginning in 2020, the threshold increases to 10% of AGI. 

I always recommend that my clients keep track of their out of pocket medical expenses, just in case. 

Cobra premiums count for Sch A medical deduction amounts, but they do not count for the self-employed health insurance deduction. If you are paying the Cobra premiums with out of pocket funds, you can deduct the premiums paid as an eligible medical expense on Sch A as an itemized deduction. 

Only your total medical expenses greater than 10% of your AGI can be deducted on Sch A if you are under the age of 65. 

If your business is set up as a C Corporation, medical expenses may be deducted as a business expense if you have a Health Reimbursement Arrangement Account (HRA). HRAs are employer-funded plans that allow a business to reimburse employees tax-free for qualified medical expenses such as co-payments, deductibles, and qualified health insurance premiums.