Reach for the Medical Deduction
The IRS allows taxpayers to deduct medical and dental expenses (including health-insurance premiums) that cover costs related to the diagnosis, cure, mitigation, treatment or prevention of a disease or injury if those expenses exceed 7.5% of the person's adjusted gross income.
For most people that 7.5% bar is pretty high, which is good reason to bunch your medical expenses to the largest extent possible. If you've already spent a fair amount in 2009, the remaining weeks of the year are an ideal time to schedule and pay for elective procedures, including high-cost dental work, LASIK eye surgery or even buying hearing aids. The person can include medical expenses of a spouse and dependant children as well.
There are limits to the government's largesse: if you're thinking of cosmetic surgery, you had better have a bona fide medical excuse for it or it can't be deducted. A facelift that boosts one's vanity and confidence would not be considered a medical necessity, but a nose job that relieves a breathing problem could, as would a broad range of Boomer favorites, including artificial hips and knees. Just make sure to pay for the procedure before Dec. 31.
See tax moves to make before the year's end:
Introduction: Tax-Saving Tactics
Capture Stock-Market Losses
Donate — and Deduct!
Gather Receipts — They're Precious
Go Green for Tax Breaks
Prepare to Convert to a Roth IRA