If you’re 65 or older before the end of this year, you might have a little bit more of a tax break on your 2016 tax return, depending on your details. That is, if you claim a medical expense deduction on your income tax Schedule A. For most people the deduction has shrunk, and will soon shrink for everyone. Here are the details, based on an article by licensed CPA Bill Bischoff and tax specialist, in Marketwatch.

Prior to 2013, you could claim an itemized deduction for your medical expenses as well as those of your spouse and dependents. The amount you could claim was the amount that exceeded 7.5 % your adjusted gross income (AGI). AGI is your taxable income (from all sources) minus certain write-offs. So let’s say your AGI was $100,000. To claim a medical expense deduction, you’d first have to add up your medical expenses and subtract $7,500 (which is 7.5% of your AGI) from the total. Let’s say your medical expenses totaled $12,500. The math looks like this: $12,500 - $7,500 = $5,000 which is the amount of medical expenses you can write off for that year, by entering this amount on your tax Schedule A.

Affordable Care Act Costs You More

Ironically, the Affordable Care Act changed all that. It raised the 7.5% threshold to 10% and therefore shrinks the amount taxpayers can write off for medical expenses. There was an exception, however. Anyone who turned 65 before the end of the year could still use the 7.5% figure, for a while. The new law said that beginning in 2016, all taxpayers, regardless of age, would have to use the 10% figure.

Here’s how that changes the bottom line. Using the same AGI of $100,000, and medical expenses of $12,500, you must subtract 10% of your AGI, which is $10,000. $12,500 - $10,000 = $2,500, which is the amount of medical expenses you can write off for that year (down from $5,000 before the Affordable Care Act).

Reprieve! For Now

One year of relief has been granted to anyone who is at least 65 before the end of 2016. If this describes you, for this year you will be able to use the lower figure of 7.5%. In other words, if you are 65 or older in 2016, you will still be able to use the 7.5% threshold. For people with significant medical expenses, this should save a lot in taxes. However, be prepared for this to end. Beginning in 2017, all taxpayers will have to use the 10% threshold, regardless of age.

What can you do? If you have been putting off certain medical/dental expenses, for example, an elective surgery or expensive medical equipment, eyeglasses or dentures, consider moving them into 2016 if possible.

In later years, bunching your medical expenses (when possible) may help, otherwise your medical expenses deduction will be smaller. Talk it over with your tax advisor.

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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