The rules are changing if you plan to itemize medical deductions on your 2013 federal tax return that you will file in 2014.

For many years, taxpayers have been able to claim deductions for allowable medical expenses not covered by health insurance that exceeded 7.5% of their adjusted gross income.  Beginning with the 2013 returns that will be filed in 2014,  the threshold for claiming medical deductions increases to 10% of adjusted gross income.

There is a temporary exemption through 2016 for individuals age 65 and older and their spouses. If you or your spouse are 65 years or older or turned 65 during the tax year  the old rules continue to apply - you are allowed to deduct unreimbursed medical care expenses that exceed 7.5% of adjusted gross income. 

Beginning with the 2017 return, all taxpayers may deduct only the amount of the total unreimbursed allowable medical care expenses for the year that exceeds 10% of their adjusted gross income.

Separated couples face choices that can have significant tax consequences.  Some of those choices can be made independently - others require communication between the spouses.

December 31 is an important day for separated couples.  Even if they are not living together, the IRS considers couples to be married for the entire tax year when they have no separate maintenance agreement in place by December 31.  When a couple is considered married by the IRS, they can choose to file as "married filing jointly" or "married filing separately".  They cannot file as "single" or "head of household". 

Filing status affects tax rates and determines which credits can be claimed.  Filing jointly can result in a lower tax bill than filing separately but does pose risks since the responsibility for any taxes due is shared.  If one spouse fails to pay, the other spouse can be held responsible for the entire bill.  Additionally, if one spouses itemizes deductions the other spouse must also itemize, even if it is not to that spouse's advantage.

In community property states such as California, filing separately requires income and deductions to be allocated based on a number of complex factors that must be documented on a special form the IRS has developed. 

Preparing your own tax return when you are separated is challenging and can create potential audit issues.  The use of an experienced tax professional knowledgeable in this area of tax law is highly recommended.  Please contact Turner's Tax Service for assistance.