Publication 554 - Older Americans' Tax Guide - 2002 Page 19
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dent was not 65 or older at the time of death, the higher
Had large unreimbursed employee business ex-
standard deduction for age cannot be claimed.
penses or other miscellaneous deductions,
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Had large uninsured casualty or theft losses,
Examples. The following examples illustrate how to de-
•
termine your standard deduction using Tables 4 –1 and
Made large contributions to qualified charities (see
4– 2.
Publication 526, Charitable Contributions), or
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Have total itemized deductions that are more than
Example 1. Larry, 66, and Donna, 67, are filing a joint
the highest standard deduction you can claim.
return for 2002. Neither is blind. They decide not to itemize
their deductions. They use Table 4 –2. Their standard
See the instructions for Schedule A in the Form 1040
deduction is $9,650.
instructions for more information.
Example 2. Assume the same facts as in Example 1
Medical and Dental Expenses
except that Larry is blind at the end of 2002. They use
Table 4 – 2. Larry and Donna’s standard deduction is
You can deduct certain medical and dental expenses you
$10,550.
paid for yourself, your spouse, and your dependents, if you
itemize your deductions on Schedule A (Form 1040).
Example 3. Susan, 67, who is blind, qualifies as head of
Table 4 –4 shows items that you can or cannot include
household in 2002. She has no itemized deductions. She
in figuring your medical expense deduction. More informa-
uses Table 4 –2. Her standard deduction is $9,200.
tion can be found in Publication 502, Medical and Dental
Expenses.
Standard Deduction for Dependents
You can deduct only the amount of your medical
!
The standard deduction for an individual for whom an
and dental expenses that is more than 7.5% of
exemption can be claimed on another person’s tax return
your adjusted gross income shown on line 35,
CAUTION
generally is limited to the greater of:
Form 1040.
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$750, or
What to include. You can include only the medical and
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The individual’s earned income for the year plus
dental expenses you paid this year, regardless of when the
$250 (but not more than the regular standard deduc-
services were provided. If you pay medical expenses by
tion amount, $4,700 for a single individual).
check, the day you mail or deliver the check generally is
However, if the individual is age 65 or older or blind, his or
the date of payment. If you use a pay-by-phone or on-line
her standard deduction may be higher. Use Table 4 –3 to
account to pay your medical expenses, the date reported
on the statement of the financial institution showing when
determine your standard deduction.
payment was made is the date of payment. You can
include medical expenses you charge to your credit card in
Itemized Deductions
the year the charge is made. It does not matter when you
actually pay the amount charged.
Some individuals should itemize their deductions because
it will save them money. Others should itemize because
Medical Insurance Premiums
they do not qualify for the standard deduction. See the
discussion under Standard Deduction, earlier, to decide if it
You can include in medical expenses insurance premiums
would be to your advantage to itemize deductions.
you pay for policies that cover medical care. Policies can
Medical and dental expenses, some taxes, certain inter-
provide payment for:
est expenses, charitable contributions, certain losses, and
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Hospitalization, surgical fees, X-rays, etc.,
other miscellaneous expenses may be itemized as deduc-
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tions on Schedule A (Form 1040).
Prescription drugs,
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You may be subject to a limit on some of your
Replacement of lost or damaged contact lenses,
!
itemized deductions if your adjusted gross in-
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Qualified long-term care insurance contracts, or
come (AGI) is more than $137,300 ($68,650 if
CAUTION
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you file married filing separately).
Membership in an association that gives cooperative
or so-called free-choice medical service, or group
You may benefit from itemizing your deductions on
hospitalization and clinical care.
Schedule A of Form 1040 if you:
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You cannot deduct insurance premiums paid with
Cannot take the standard deduction,
pretax dollars because the premiums are not included in
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Had uninsured medical or dental expenses that are
box 1 of your Form W –2.
more than 7.5% of your adjusted gross income (see
If you have a policy that provides more than one kind of
Medical and Dental Expenses, later),
payment, you can include the premiums for the medical
•
Paid interest and taxes on your home,
care part of the policy if the charge for the medical part is
Chapter 4 Deductions
Page 19
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