Some of these steps are complex and require that you itemize your return, rather than take the standard deduction. And some deductions are claimable only in the amount that exceeds 10 percent of your adjusted gross income. Other restrictions may apply, so consult a tax adviser or use tax preparation software to see whether these tips can be put to work for you.
1. Claim a portion of long-term care insurance premiums. The older you are, the higher the amount you can claim. Here's the scale: Age 40 or under, the maximum claimable amount is $350; 41 to 50, $660; 51 to 60, $1,310; 61 to 70, $3,500; 71 or over, $4,370.
2. Deduct the room and board costs of an assisted living facility if the resident is there mainly for medical purposes and is getting staff assistance to perform normal activities of daily living, such as bathing and dressing, or has cognitive impairment that requires supervision. The services are deductible, too. They must be part of a plan of care prescribed by a licensed health care provider for a chronically ill person.
3. Many taxpayers don't realize that medical expenses for items such as hearing aids and batteries, artificial teeth, prescription drugs, oxygen and wheelchairs can be deducted, says Mark Steber, chief tax officer for Jackson Hewitt, a tax preparation service.
4. Do you work but pay a home health aide to take care of your spouse or dependent? You may be able to claim a credit of up to $1,050 on up to $3,000 in dependent (or spouse) care expenses. That credit is shaved directly off your bottom-line tax bill; it is not a deduction from your taxable income.
5. If you contributed after-tax income to your retirement account, a percentage of your annual distribution may be tax-free. The logic for this, says Steber, is that if you already paid taxes on money before you put it into the account, it shouldn't be taxed again when it comes out. But tax rules are never simple. You will have to pay taxes on any earnings that those after-tax contributions generated while in the account. On a related note, you can deduct legal fees for retirement tax planning.