Text Resize

Saturday September 24, 2016

Washington News

Washington Hotline

House Passes Senior Medical Care Bill

On September 13, the House voted 261 to 147 and approved the Halt Tax Increases on the Middle Class and Seniors Act (H.R. 3590). This bill would restore the medical deduction threshold limit to 7.5% of income, rather than the current 10% threshold that applies for taxpayers over age 65.

In the Patient Protection and Affordable Care Act, the threshold for itemized medical deductions was raised from 7.5% of adjusted gross income (AGI) to 10%. However, taxpayers age 65 and over were permitted to use the 7.5% threshold for a period of four years. In 2016 the threshold is changed to 10% for everyone.

For taxpayers over age 65, the increased 10% threshold will make it more difficult to qualify for medical deductions. If a taxpayer over age 65 has AGI of $50,000, then only his or her medical expenses over the 10% limit of $5,000 will be deductible. If the taxpayer has $6,000 in medical expenses that year, then only $1,000 is deductible (the excess over the $5,000 threshold).

The House bill was supported by AARP. The comment on an AARP blog suggested that most of the taxpayers who claimed the additional medical deduction have incomes less than $75,000.

House Ways and Means Committee Chairman Kevin Brady (R-TX) spoke in favor of the bill. He stated, "The committee believes that individuals with high health care cost should not be subject to a tax increase after 2016."

The Ranking Member of the House Ways and Means Committee is Sander Levin (D-MI). He noted that the revenue from the bill is designed to help fund the Affordable Care Act benefits. Rep. Levin cited Joint Committee on Taxation information that suggested two thirds of the tax benefits from the 7.5% threshold would accrue to upper-income persons. Rep. Levin indicated that he would continue to oppose the bill and prefers to leave the medical deduction threshold at the current 10% level.

Published September 16, 2016

Previous Articles

New Identity Theft Attacks

Potential IRS Improvements

Impersonation Scams Reduce IRS Credibility

Tax Fraudsters Use iTunes Cards

IRS Battles Stolen Identity Refund Fraud

scriptsknown