Medical expenses paid after a car accident may be tax-deductible under certain circumstances.
In general, you may be able to deduct medical expenses that exceed a certain percentage of your adjusted gross income (AGI). For tax year 2021, the threshold is 7.5% of your AGI, but it is set to increase to 10% for tax year 2022 and beyond.
To qualify for a tax deduction, your medical expenses must be necessary and related to the treatment of your car accident injuries. This can include expenses for things like doctor visits, hospital stays, prescription medications, physical therapy, and chiropractic care. You must also itemize your deductions on your tax return rather than taking the standard deduction.
It’s important to note that not all medical expenses are tax-deductible, and there are limits to how much you can deduct. In addition, state tax laws may vary, so it’s a good idea to consult with a tax professional for guidance on your specific situation,” explained Kathy Jimenez, Owner of Daniel Ahart Tax Service in Roswell.
What are the limits to how much you can deduct in Georgia?
In Georgia, the same federal rules apply for deducting medical expenses on state income tax returns. Therefore, you can deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI) on your Georgia state income tax return for tax year 2021. However, starting in tax year 2022 and beyond, the threshold will increase to 10% of your AGI, as it will for federal tax returns.
It’s important to note that Georgia does not have a state-specific deduction for medical expenses, so you will need to use the same calculation as you would on your federal tax return. Additionally, if you claim the standard deduction on your federal tax return, you cannot also claim a deduction for medical expenses on your Georgia state income tax return.
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