The fight against a disease related to asbestos is an expensive test that involves increasing medical expenses and loss of income.
If you or a loved one has been injured by asbestos, filing a personal injury lawsuit usually provides the best opportunity for obtaining financial assistance. The speed at which you can get compensation (or not) depends on the circumstances of your particular case. However, while your application is pending, you'll probably deal with tax season.
much as you may fear this time of year, it actually provides a good opportunity to discuss ways to ease the financial burdens that accompany a serious illness. Three areas to consider are medical and nursing allowances and a lump sum payment from the sale of a life insurance policy.
Medical expenses
Most people are deductions of tax at current federal income available for medical expenses, but they may not realize that the costs medical must eat a significant amount of your income before you can take all the deductions. Specifically, you can only deduct medical expenses that exceed 10 percent of your adjusted gross income. The threshold drops to 7.5 percent if you were born before January 2, 1949.
The medical expenses for purposes of tax deductions on income include:
- costs "diagnosis, cure, mitigation, treatment or prevention of disease, and treatment costs affecting part or function of the body ?? (Note:. ?? the expenses must be primarily to alleviate or preventing a disease ??.)
- the payment of services by doctors, surgeons and other physicians
- the costs of premiums paid for the insurance cover. medical care costs and your transportation to receive medical care.
Consult a qualified tax for details if your medical expenses are deductible. Keep in mind that it has no importance when you received medical care: you can deduct expenses paid during the tax year.
Also, remember that receiving a legal settlement for your injuries affect your taxes. If you deduct the expenses for your illness related to asbestos and later receive a legal settlement of these injuries, you should include the part of the settlement of medical expenses in your income.
If you do not itemize deductions for medical expenses, and later receive a settlement, the settlement proceeds are not taxable.
you can decide not to deduct medical expenses because you expect to receive a legal settlement. Keep in mind there is no guarantee that you will receive compensation. So before making a decision on whether to deduct, you may want to talk to your professional about how to provide for the possibility of a settlement, and ensure that you get the best tax benefits now and in fiscal future.
IRS Publications 502 and 4345 have more information on medical deductions and tracking facilities.
Caregiver deductions
If you pay part of the medical expenses of a close, AARP offers advice on the potential tax breaks:
- dependent on If your parent's income for the taxation year is less than $ 3,00, excluding social security and disability, and you provided more than half the support of your parents, you might be able to claim your report as a dependent. (Note: Only a brother can request a dependent relative.)
- Deductions medical expenses: If you provide more than 50 percent of support from your parents, you may be able to deduct the portion of medical expenses more than 10 percent of your adjusted gross income (7.5 percent if you are 65 or over)
- Nonrelatives :. you may be entitled to deductions for non-relative if they were a member of your household for the entire fiscal year.
- Types of Expenditure: the costs of food, housing, medical care, clothing, transportation and bathroom modifications necessary for medical reasons can qualify for tax deductions. Caregivers may be able to deduct the cost of prescriptions, long term care services, copays, deductibles and other out-of-pocket not covered by health insurance costs. Tax credits may also be available for caregivers who work but pay for care for parents who can not be left alone
- Flexible Spending Accounts (FSAs) :. Caregivers who provide more than 50 percent support RTA can use tax-free for independent and dependent parents.
caregivers who receive remuneration for their services should know that they may be required to declare the income and pay self-employment taxes. In addition to consulting a tax professional, these caregivers should also consult IRS Publication 926. (Publication 926 also provides important information that people pay for their own care should review.)
the IRS also offers detailed examples of caregivers who are or are not responsible for self-employment taxes.
Viatical settlements
If you sold a life insurance policy to a third party, you should know if that money is taxable. These arrangements are known as viatical settlements. Companies who purchase these policies can provide between 25 percent and 100 percent of the death benefit as a prepayment.
The sale may be taxable, depending on whether you are chronically or terminally ill, and the company purchasing your policy is authorized or registered in your country of residence. The funds are usually for people terminally ill with a life expectancy that meet the tax-free requirements. You should consult a tax professional to help you determine federal and state rules applicable to your situation.
A certified financial planner can give you more information if you plan to sell a policy to a viatical settlement company. They can also help you decide whether this choice is right for you and your family. You can contact your state insurance department for more information about viatical settlements and related tax issues.
Getting tax assistance
If you have already filed your taxes or have produced statements of the previous year regardless of these issues, there is no need to panic. You can usually file amendments to your tax return within three years from the original due date. So if you think one of those issues that affect you, it might be helpful to have a professional for tax on your recent tax returns.
I recommended to consult a tax expert on several of these topics because tax preparation is a detail specific task done. People sometimes forget about tax laws of the state, in addition to federal laws. It is good to have a familiar resource with both
Another compelling reason for using a tax expert. They can help you look beyond the current tax year and to make decisions that offer tax advantages or improve your cash flow in the future.
Finally, you might be surprised to learn that the free tax assistance is often available. Contact your local cancer support organization to help find volunteer experts. The IRS also lists organizations that provide free assistance to low-income tax preparation, disabled and elderly taxpayers.
The Department of Veterans Affairs United States published a similar list of resources for veterans.
