[sidony]

Ugh, taxes confuse the heck out of me. But I think I just figured out that if I knew how to itemize some of my therapy would be tax-deductible. I didn't keep track of any of my paperwork though, and it'd be hard to figure out which part was reimbursed by insurance and which wasn't. Still. I might give it a shot. If you go over the standard deduction, how much of therapy ends up being tax-deductible? Anyone know? (And don't be surprised if that question doesn't actually make sense -- I'm not good with this stuff.) Last year my income was lower because I was out of work for 3 months. I also get to deduct the money that I spent enrolling in a certificate program (I checked, it definitely qualifies). :-) So if I could figure out the therapy aspect, it might be worth it. Hard work though. And I have no idea how it affects things that I used to pay for therapy with an FSA (meaning on some of it I didn't use taxed money anyhow). Ugh ugh ugh. I'm a designer. This isn't my field at all. Ugh ugh ugh. Any input?

Thanks, Sidony

P.S. Sorry this isn't really related to the whole therapeutic relationship. Sometimes life gets you stuck in mundane details like money....

[Lemon]

Sidony,
If you have more itemized deductions (schedule A) than the standard deduction you should use the itemized. Itemized deductions included medical expenses, mortgage interest, automobile taxes, stuff like that. Your therapist should be able to tell you how much you paid him during 2007 versus how much your insurance paid him. Usually they have accountants that can easily get this info for you.

The amount you paid into your FSA (pre-tax $) is included in the calculation of what is medical deduductios (if you used the $ to pay bills.)

For medical deductions on schedule A (itemized), unfortunately you can only deduct medical and dental expenses if the amount you paid exceeds 7.5% of your adjusted gross income. (The form will help you calculate this). If you have other itemized deductions you put those on schedule A also, then you see if Schedule A is greater than the standard deduction of $5,530 for an individual.

Did this help at all? Feel free to ask me to clarify.

[PsyChris]

As with taxes there are additional rules to what Lemon said. It's best to ask your Therapist so he/she can get in contact with an acountant.

Your insurance must be HSA qualified and in place by a certain date during 2007, if your mental health insurance is supplemental it becomes further complicated............this is why I changed my major from Accounting to Psychology lol.

[Perna]

Of course, taxes are due Tuesday so you probably don't have time to contact your therapist :-)

Can you total your checks to or receipts from your therapist to see how much you paid? Travel to see your T if you went from work and travelled over a certain number miles, etc. might be deductible too; I use to get a lot added there as my T was in a different state, a couple hours drive away.

[sidony]

Hey thanks guys. :-)

I can figure out how much I paid T fairly easily. It's more complicated to try to figure out how much I got reimbursed. The insurance reimbursed me directly since T doesn't take insurance. And naturally I didn't keep track of it. I definitely went over 7.5%. And then I had a fairly large percentage of my education that I paid for qualified as tax-deductible (something I hadn't expected or I might have kept track of things differently). Ultimately it might just be a big hassle, but I'd probably go over the standard deduction. Maybe if I take a few (un)educated guesses I can figure out whether it's enough over it to be worth the time involved in figuring it out.

I guess if I knew how much I paid T (easy to figure out), I'd then subtract how much I was reimbursed (harder to figure out), and then subtract again the amount that I'd contributed to an FSA (??? -- not sure on that last part, but I assume I'd just subtract the total contribution).

Who needs this?! Too much work!

Sidony

[EJ711]

Sidony,

Taxes are a huge administrative burden. I spent hours on just getting all my receipts together, and summarizing them on Excel spreadsheets. Then I got hit with a whopper of a tax bill, because of allocated attorney's fees from a class action suit against my employer of 17 years.

I was feeling fairly comfortable before taxes, now I'm feeling pretty poor again.

[sidony]

(Wish I still had the FSA though -- my new job doesn't have it and it was a good deal.)

[sidony]

Sorry EJ711, that really sucks. I should have titled this thread "taxes suck."

I think my best guess is that if I figure out all this paperwork, it'd be worth a few hundred dollars more in a refund. I don't think I can handle the hassle for that.

I know lots of folks are having to pay and that sucks. Particularly the self-employed. One of my good friends IRL self-employed (a therapist actually), and she always has horrendous tax bills. I think the self-employed really get screwed.

Sidony

[sunrise]

Sidony, it shouldn't be hard to figure out how much your insurance reimbursed you for therapy. Go to your insurance website, login, and you should be able to pull up a page with all of your claims and how much each was reimbursed for. It doesn't matter whether insurance reimbursed the provider directly or sent the reimbursement to you. All the claims will be listed.

I didn't know medical expenses were deductible. I pay for therapy completely out of pocket so this could really help me. Too late for 2007 but I'll keep this in mind for 2008.

Good luck, Sid!

[sidony]

Y'know sunrise, you're right. I did get on the insurance website and now I know exactly how much I paid and how much I was reimbursed for. So now here's the question: is this procedure right?

1. I should figure out what 7.5% of my income was for last year.
2. I should add up MY total costs (what insurance didn't pay).
3. I should subtract amount 1 from amount 2.
4. And then, here's the part that confuses me: Should I then subtract the total amount I put into an FSA last year?
5. And then I should see if that amount puts me over the standard deduction or not.

Is that right? The FSA bit is what confuses me. I guess whatever I put into the FSA is already money I haven't been taxed on. And nowhere do I remember my tax software (TurboTax) asking me for that kind of information.

Sunrise, I wouldn't have known about medical expenses either except that TurboTax.com asked me those questions....

Sidony

[EJ711]

Sidony,

Everyone winds up adding all their deductions, to find up if they are more than the standardized deduction, which I believe is the 7.5% of total income. If the standardized deduction is greater, then you use that.

The extent of my tax knowledge.

EJ

[Perna]

</font><blockquote><div id="quote"><font class="small">Quote:</font>
What Are Medical Expenses?

Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes. They also include dental expenses.

Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.

Medical expenses include the premiums you pay for insurance that covers the expenses of medical care, and the amounts you pay for transportation to get medical care. Medical expenses also include amounts paid for qualified long-term care services and limited amounts paid for any qualified long-term care insurance contract.

</div></font></blockquote><font class="post">
From: http://www.irs.gov/publications/p502/ar02.html#d0e232

[Lemon]

Sidnoy - You should not have to subtract out the money you had deducted from you paycheck to put in a FSA. FSA is money withheld from your paycheck and then reimbursed back to you for medical expenses that you paid out of pocket, so it is still medical expenses you paid for even though the benefit is that you don't have payroll taxes withheld on it. Do a search on the irs.gov website for FSA, but I'm pretty sure this is correct.

[sidony]

Thanks guys. I figured it out up to a point: I know how much I spent on medical bills, and I know how much I was reimbursed. What I don't know is how much I saved in taxes already by paying some of my bills pre-tax with an FSA (Lemon -- yeah you're right, it's definitely not all a reimbursement, only the amount that I would ordinarily have paid in taxes). And if I did know how much that was, I still wouldn't know how to enter it. I looked and that's a leading question in the TurboTax community (and none of the q&a's already posted on it there make any sense to me).

Ugh, very frustrating.

And totally un-therapy-related!!! Please forgive! It's the time of year! :-)

Sidony

[EJ711]

Sidony,

Everyone needs some emotional support after battling taxes.

EJ

[Perna]

Therapist and client alike

[sidony]

Haha. Definitely. What a bummer! and naturally I've wasted a bunch of time I could have spent on other things. Maybe I'll see what my fellow group therapy participants have to say on taxes this week... :-)

Sidony

[sunrise]

Sidony, You can always call the IRS and ask about the FSA.

Perna, thanks for that info. I didn't know that the cost of transportation to and from the medical treatments could be deducted. With today's gas prices, that really adds up. I am definitely the deductions next year.

[Razzleberry]

I don't have a ton of time here, so I didn't read all the posts. Forgive me if this has been said.

First - yes, psychotherapy counts as medical expenses for your Schedule A. Anything that you paid for that wasn't reimbursed by insurance, or that wasn't paid for pre-tax out of your FSA, you can deduct. If you paid for it with FSA money, you can't deduct it because that money was already tax-free.

Also - if you are getting a refund - you don't really have to file by tomorrow. You can file an extension, and that gives you until October 15th to file your taxes. And if you're getting a refund, you don't have to worry about interest. If you are paying...then yes, you have to pay by tomorrow or they charge interest until you pay.

Call your insurance company and see if they can give you an annual summary or something like that. Or, do they pay a certain percentage or copay per visit? That could help.

Then - I'd suggest using Turbo Tax free edition (you can get it online) or any other free tax software thing. If you plug in the numbers, it will calculate things for you. Much simpler. And you probably don't make too much money for it to make you pay for it (if you make over a certain $$ then it's not free..)

Good luck!

PM me if you have more questions. (I'm a tax accountant, by the way...)

[Razzleberry]

Oh, some clarification.

You don't subtract the 7.5% from your total. Just enter the total in TurboTax and it will do the 7.5% deal for you.

For the FSA...here's how it works:

Add up everything YOU paid out-of-pocket for medical expenses (including therapy). Then subtract from that number the amount that was reimbursed from your FSA account.

Example -

Paid $10,000 for surgery
Insurance reimbursed $5,000
Had $2,000 in your FSA account that you used to pay for it

That leaves $3,000 that you paid, by yourself, without insurance reimursement or FSA.

Put that $3,000 number on the line for medical expenses. Turbo Tax will take care of the rest.

FSA money ends up being just like insurance reimbursement in a way. Because that came out pre-tax so you can't deduct it again.

Does that make a little bit of sense??

(Sorry I'm not so great with explaining thing sometimes!)

[sidony]

Thanks Razzleberry!

I think I'm all set now. And I did use TurboTax. It rocks!

Thanks for letting me hijack the therapy board for a while. But I swear, taxes alone would make anyone need some therapy. Too stresful!

Sidony