In two previous columns, I explained why couples entering into second or third marriages should consider the tax consequences beforehand. To explain how I’d counsel them, I created Marsha (third marriage for her) and John (fourth one for him).
I advised her to scrutinize his returns; they can provide many kinds of insights into him. In a previous column, I discussed five such items. Below are another five items:
1. Medical Expenses
Those outlays are claimed at the top of Schedule A and are allowable only to the extent that their total in any one year exceeds a specified percentage of adjusted gross income. I remind Marsha that Congress keeps changing the nondeductible floors.
For 2016 and earlier years, the floors were 10 percent and 7.5 percent for those older than 65. For 2017 and 2018, they’re 7.5 percent for all individuals. For 2019 and later years, the Tax Cuts and Jobs Act restores the threshold to 10 percent for John and everyone else, assuming Congress doesn’t revise the rules again.
Year in and year out, John claims hefty deductions for medical expenses that exceed the floors. True, he might be able to easily explain the deductions as attributable to payments for insurance premiums and expenses usually not covered by insurance, such as dental work, hearing aids, glasses, medically required home improvements or private duty nurses.
But I point out to Marsha that there could be another reason for substantial write-offs: John sees a psychologist or psychiatrist. There’s nothing wrong with that. But Marsha should know what issues John is grappling with—and also share the emotional struggles she has.
About Julian Block
Attorney and author Julian Block is frequently quoted in the New York Times, Wall Street Journal, and the Washington Post. He has been cited as “a leading tax professional” (New York Times), an “accomplished writer on taxes” (Wall Street Journal), and “an authority on tax planning” (Financial Planning magazine). More information about his books can be found at julianblocktaxexpert.com.