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  • Medical Expenses and itemizing taxes

    I'm 5th year otolaryngology resident. My wife is a Nurse.  For that past few years, we have been filing our taxes married but separately because I'm pursing the PSLF program, making IBR payments based on my income only, and trying to keep payments low.

    My AGI is around $60,000 and hers is around $70,000. We spent approximately $68,000 in 2017 in medical expenses primarily for fertility treatments because we have been trying to start a family. I know to do a itemized deduction on medical expenses you have to spend more than 10% your AGI.

    From what I found, I can deduct approximately $28,000 ($34000- 6000) and she can deduct $27,000($34000-7000) .  I have a few questions with regard to this.

    Would it be more beneficial for one of us to deduct the entire $68,000?

    Would there be any additional benefit to filing married jointly and itemize the full value of $68,000 vs married separately even though my IBR payments would go up if we filed together?

    Is this a significant amount to make any significant difference on our taxes vs just taking the standard deduction?

    Thanks, I appreciate any help or advice.

     

  • #2
    I'd suggest you buy/try TurboTax (or similiar...), and see what it shows. you can quickly toggle between MFJ/MFS and/or just create mutiple files (returns) and see how it shakes out.

    Or do it on paper. The 1040 isn't that hard to fill out, and you'll get a close enough answer in 10 minutes. Print out 2 copies, do some math, see how it goes!

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    • #3
      Agreed with adventure - play around in turbo tax it's very educational

      Looking at it surficially - that's a huge deduction and certainly larger than the $6350 standard deduction, I mean rough calc

      60k agi - 28k deduction (itemized) - 4K exemption = 28 k taxable income which is roughly what $3700 in tax?

      Vs

      60 k - 6.3 - 4 = 50k taxable -- on top of my head 8k+???

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      • #4
        As others have suggested, there is just no way to know with the facts given. You really do need to play around with the tax software to determine the optimal configuration. If you live in a CP state (Community Property), you must follow CP laws when divvying up the deduction. Same if the expenses are paid for with separate property of one spouse (see previous link).
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          Good advice so far and nothing else to add from a financial perspective.  I wish you all the best with your fertility struggles.  It's a painful process now but in the end, sooner or later, you'll have the family you are both seeking and will be closer for having gone through these trials.

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          • #6
            Excellent thanks everyone for the assistance and the thoughts. I use tax slayer and will analyze the different options. Also, thanks for sending the IRS link. We live in PA which is not a CP state. Regardless we plan on divvying up the deductions and filing married but separately assuming that works out best.

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