National Breast Cancer Awareness Month: Tax Deductions

Did you know that breast cancer is the most common cancer among women and the second leading cause of death for women worldwide? It is estimated there will be more than 230,000 women diagnosed with breast cancer in the U.S. in 2013. Even more chilling, approximately 39,000 women will die from breast cancer in the U.S. this year.

We have approximately three million breast cancer survivors in the U.S., which makes the chances pretty good that you know, or are related to, one of these survivors. The struggle with this terrible disease has been long, but thanks to the help of people across the country, and all over the world, we are making progress, and hopefully one day it will no longer exist.

October is a time we give additional visibility to the disease and those affected by it. But, what does any of this have to do with taxes? This is, after all my tax blog. So, let me tell you.
If you are fighting breast cancer right now, granted taxes are the last thing on your mind, but there are some things you should know. If you itemize deductions and have medical expenses, you may be able to deduct a portion of your out-of-pocket expenses on your tax return and reduce your taxes and maybe make that refund a bit larger. Tax return deductible medical expenses include the cost of preventive screening (any kind of preventive medical screening including all cancers), the cost of treatment from lab tests, medical procedures, hospital and clinic visits and stays, and other medical expenses that range all the way to rehabilitation costs including prosthetics, and prescriptions. Travel to and from doctors, hospitals, pharmacies and even rehab centers are deductible at 24 cents per mile plus any tolls, parking or other transportation costs. Lodging is deductible if you, or your caretaker, must stay overnight to receive treatment or consult with a doctor. The cost of wigs for patients who lose their hair during treatment are also deductible. The list of medically related, and by extension, tax deductible expenses is very large and very inclusive. It may even include home renovation to the extent that the renovation is related to an illness or treatment or medical need.

When determining allowable medical deductions, taxpayers must first reduce any out-of-pocket costs by those reimbursed from a medical flexible spending account (FSA). Also any expenses paid by insurance are not included. Once you have your total allowed expenses, subtract 10 percent of your adjusted gross income from the total, and the remaining expense amount is the allowed deduction. These deductible medical expenses along with other allowed deductions such as mortgage interest, property tax, state sales or income taxes and charitable contributions are all added up as itemized deductions and used instead of the annual standard deduction to reduce your income before determining your taxes.

The next common deduction related to breast cancer is for charitable contributions you make to one of the many organizations working towards finding a cure and supporting cancer patients undergoing treatment. So if you gave a donation, sponsor a runner or walker or any cash or non-cash gift or donation -- it may be tax deductible. If you have given or donated or are planning to give to this cause or any charitable cause, keep your receipts and cancelled checks or credit card statements supporting your donation.

If you participate in any of the annual walks, runs,or other community organizations during Breast Cancer Awareness Month, or any other time of the year, keep track of the out-of-pocket cost of participating. These costs include 14 cents per mile for travel while organizing, working and cleaning up the event. Any postage, printing, mailing or other costs of advertising should also be tracked. Many volunteers dig deep to provide food, drinks and gifts to the volunteers and even the participants. Make sure you keep receipts of all of your expenses, a logbook of all your miles, and include them with your annual tax return records. Better documentation likely means a bigger tax deduction and lower taxes.

The suggestions for medical expenses and charitable expenses are true for any type of illness or volunteer work. So many events in our lives have a tax impact that we don't think about.. With a little organization and planning to keep receipts in a central location, we can use these events to reduce our tax bite when we file our tax returns. It certainly does not hurt to spend a bit more time understanding the rules, keeping better records and saving much needed tax dollars, possibly allowing you to provide even more support for your favorite organization or cause.