The thrifty/liberal and different categories mean, how liberally do you spend your money on food. Do you eat on a "thrifty budget" (i.e. usually buy only on sale, no brand names, buy in bulk to save money, buy inexpensive types of foods), or on a liberal plan where you would buy brand names, more expensive foods (expensive types of chicken cuts, expensive types of steaks/cuts) and such. Are you a "bargain" hunter or do you buy more expensive types without care to price. So you and your husband need to decide what you consider yourselves. On ours, I consider myself "thrifty" under the female category and for Mark, I consider him "low cost" under the male category. I do this because even if he didn't have CF, I imagine (his body type, interest in body building...) that he would eat a little more red meat (which is a bit expensive) and some other "name brand" type foods.
From that, you would document ALL you spend on food each month. Then you would subtract the costs indicated for whatever categories you choose for yourself and your husband. For example, say you choose Low cost for both of you, (just an example, and these numbers are just an example too) and the low cost male is $185 and the low cost female is $135. And for January you tracked all your reciepts and your total food expense (grocery store, eating out and throw in a bit of cash) is $650. Well, you would subtract $185 AND $135 from $650 and the remainder is what is deductible. Add that up over 12 months, and that's your "CF food" medical portion. If you ate about the same each month, at the end of the year you would have about $330 a month x12 equals $3960.
Generally, this "CF food" portion in itself is NOT enough to get you the deduction you need. But when it's coupled with other expenses like insurance premiums, copays, prescriptions, over the counter (deductible) medications, medical miles, medical visits, it can add up to be worthwhile. THe only downside is usually you don't know if it will be worthwhile until you do the calculations.
the 7.5% comes into play AFTER you've done all your tallying for medical expenses. In order to take the medical deduction on your taxes, ALL your medical expeses must be equal to or greater than 7.5% of your ADJUSTED GROSS INCOME. Not the income on your W2, but the income after you take any deductions on the front of your 1040 (tuition expenses if you aren't doing a hope or lifetime learning credit, moving expenses if required for a job, self employment tax, ira deduction, student loan interest deduction......
So, if your adjusted gross income is $100,000 then 7.5% of that is $7500 so your TOTAL medica expenses would need to be AT LEAST $7500. And it gets even tricker. The standard deduction for this year is:
$5150 if married filing separately
$10,300 if Married filing jointly/qualifying widow(er)
$7,550 if Head of household
So, if in your itemized deductions category, you ONLY had medical expenses and no other expenses and your medical ONLY totaled $8500 and you are married filing joint, then it would be useless to take your "itemized" deductions because your standard deduction of $10,300 is MORE. But if you have not only $8500 in medical deductions but you also have $6,500 in mortgage interest, $1500 in property taxes, and $600 in donations, then that would be worthwhile because it would take your deductions up to $17,100 in comparison to your $10,300 "standard deduction"
(other expenses included in itemized deductions category are Medical and dental expenses, taxes you paid like state and local, property taxes, personal property taxes, home mortagage interest points/interest on your mortgage, investment interest, gifts/cash to charity, casualty theft and loses, job expenses not reimbursed by employer like uniform, job travel, union dues, job education, tax preparation fees...)
Also, make sure you save ALL reciepts for anything you are deducting. I save mine in a 12 slot envelope throughout the year, and then after I file my taxes, I file all of them, along with all of my credit card reciepts, phone recipets, insurance EOB's and anything else I wish to save, in a small box with the year marked it and SAVE IT for SEVEN (7) years because you can be audited for 7 years. I say for safety, keep for 10 but that's just me.
Also, have you seen the spreadsheet here??? <a target=_blank class=ftalternatingbarlinklarge href="http://www.cysticfibrosis.com/files/julies_food_supplement_log.xls">http://www.cysticfibrosis.com/...ood_supplement_log.xls</a> There are different tabs on the bottom for Food and Medical, Uniform Deductions, Medical Miles... so you can see how I've set it up.
From that, you would document ALL you spend on food each month. Then you would subtract the costs indicated for whatever categories you choose for yourself and your husband. For example, say you choose Low cost for both of you, (just an example, and these numbers are just an example too) and the low cost male is $185 and the low cost female is $135. And for January you tracked all your reciepts and your total food expense (grocery store, eating out and throw in a bit of cash) is $650. Well, you would subtract $185 AND $135 from $650 and the remainder is what is deductible. Add that up over 12 months, and that's your "CF food" medical portion. If you ate about the same each month, at the end of the year you would have about $330 a month x12 equals $3960.
Generally, this "CF food" portion in itself is NOT enough to get you the deduction you need. But when it's coupled with other expenses like insurance premiums, copays, prescriptions, over the counter (deductible) medications, medical miles, medical visits, it can add up to be worthwhile. THe only downside is usually you don't know if it will be worthwhile until you do the calculations.
the 7.5% comes into play AFTER you've done all your tallying for medical expenses. In order to take the medical deduction on your taxes, ALL your medical expeses must be equal to or greater than 7.5% of your ADJUSTED GROSS INCOME. Not the income on your W2, but the income after you take any deductions on the front of your 1040 (tuition expenses if you aren't doing a hope or lifetime learning credit, moving expenses if required for a job, self employment tax, ira deduction, student loan interest deduction......
So, if your adjusted gross income is $100,000 then 7.5% of that is $7500 so your TOTAL medica expenses would need to be AT LEAST $7500. And it gets even tricker. The standard deduction for this year is:
$5150 if married filing separately
$10,300 if Married filing jointly/qualifying widow(er)
$7,550 if Head of household
So, if in your itemized deductions category, you ONLY had medical expenses and no other expenses and your medical ONLY totaled $8500 and you are married filing joint, then it would be useless to take your "itemized" deductions because your standard deduction of $10,300 is MORE. But if you have not only $8500 in medical deductions but you also have $6,500 in mortgage interest, $1500 in property taxes, and $600 in donations, then that would be worthwhile because it would take your deductions up to $17,100 in comparison to your $10,300 "standard deduction"
(other expenses included in itemized deductions category are Medical and dental expenses, taxes you paid like state and local, property taxes, personal property taxes, home mortagage interest points/interest on your mortgage, investment interest, gifts/cash to charity, casualty theft and loses, job expenses not reimbursed by employer like uniform, job travel, union dues, job education, tax preparation fees...)
Also, make sure you save ALL reciepts for anything you are deducting. I save mine in a 12 slot envelope throughout the year, and then after I file my taxes, I file all of them, along with all of my credit card reciepts, phone recipets, insurance EOB's and anything else I wish to save, in a small box with the year marked it and SAVE IT for SEVEN (7) years because you can be audited for 7 years. I say for safety, keep for 10 but that's just me.
Also, have you seen the spreadsheet here??? <a target=_blank class=ftalternatingbarlinklarge href="http://www.cysticfibrosis.com/files/julies_food_supplement_log.xls">http://www.cysticfibrosis.com/...ood_supplement_log.xls</a> There are different tabs on the bottom for Food and Medical, Uniform Deductions, Medical Miles... so you can see how I've set it up.
