Let the negotiations begin.
The Senate Republican tax bill differs in a lot of ways from the House version. And one chief difference is the deduction for medical expenses. It’s left alone in the Senate bill. House Republicans want it gone.
“We are pleased that the Senate tax proposal includes some important improvements over the House bill voted out of the Ways and Means Committee,” AARP executive vice president Nancy LeaMond said in a statement. “The Senate proposal would keep the medical expense deduction for millions of Americans with high medical costs — something that is especially important for middle income seniors. The House tax bill repeals the medical expense deduction, resulting in a health tax for taxpayers who get sick or have chronic conditions.”
But the elimination of the medical deduction could still happen.
“If the full House and Senate approve different proposals, negotiators from the two bodies will hammer out a compromise version that both would have to approve before it can become law,” wrote Sabrina Eaton at cleveland.com.
Also of interest to seniors in the GOP tax bill is that “the Senate preserved the $5,000 dependent care tax credit to help working families offset the costs of care for their children and older dependents,” as Adam Shell for USA Today points reported.
Your voice matters, so let your congressional representative know what you like or dislike in the tax bill. Here’s some reading to help you sort through what’s on the table:
— GOP tax plans: 7 big differences between the House and Senate
— Winners and losers in the Senate GOP tax plan
— This GOP tax plan provision could be ‘catastrophic’ for seniors
Also, did you know that for seniors age 65 and older the threshold to meet the medical expense deduction for an itemized return was reduced to 7.5 percent for the 2013 to 2016 tax years? The threshold for other taxpayers is 10 percent of their adjusted gross income. A bipartisan bill – the Seniors Tax Hike Prevention Act of 2017 — would allow for a two-year delay, thus keeping the medical expense deduction to 7.5 percent during that time.
“If this needed, bipartisan legislation does not pass soon, older taxpayers with high health costs will face a 2017 health tax hike due to a reduced medical expense deduction,” AARP chief executive Jo Ann Jenkins said in a statement last month. “The medical expense deduction helps millions of middle income older Americans to offset high out-of-pocket health care costs.”
Terri Corcoran of Falls Church, Va., like so many others, wrote to me about why the medical expense deduction is so valuable for families faced with enormous health bills: “My husband had a neurodegenerative condition, which rendered him totally disabled both mentally and physically within five years of our 17-year marriage,” Corcoran wrote. “I cared for him at home until his death last year. I employed home health aides for about 10 hours a day to help me care for him. I could not work because my husband needed my full-time care, in addition to the aides I employed. I loved my husband and was determined to keep him at home with me. We were fortunately able to afford the aides, because I was very careful with the money we had, and BECAUSE I WAS ABLE TO DEDUCT THESE EXPENSES TO LOWER MY INCOME TAX BILL. There are many family caregivers in this situation. Their medical expenses also include home adaptive renovations, health insurance, handicap equipment, doctor and drug expenses not covered by insurance, and more. Family caregivers SAVE the government by not accessing Medicaid. Family caregivers are caught between astronomical expenses and in many cases, the inability to work because of the caregiving demands.”
Keep your stories coming and any comments you have about how the GOP tax bill will impact your financial life. Send your comments to firstname.lastname@example.org.
Retirement Rants and Raves
I’m interested in your experiences or concerns about retirement or aging. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to email@example.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”
Maureen McLeod of Lake Como, Pa., wanted to rant about the GOP tax bill: “While tax breaks to working families are welcome by all, what will happen to retirees who are on fixed incomes? In my case, we are both retired. This tax plan seems designed to ultimately cause Social Security (and perhaps other programs) to become unsustainable in the near future. In the immediate future, it seems designed to force the middle class to subsidize the wealthy. It will greatly expand the already huge wealth gap between middle-income persons and those who are upper income. Hence, the Republican tax bill should be entitled, ‘Let them eat cake.’”
Stephen is concerned about any proposals to increase the full retirement age for Social Security. He writes: “Various politicians keep bringing up the idea of raising the retirement age. Well that may be fine for office workers. But not for blue-collar workers in the trades! It’s a fact that these jobs are hard on the body, often with shorter than average life spans. There’s no way I can keep doing my job satisfactorily much beyond 55 whereas a desk worker could easily do his or her work way beyond 55. It seems like class warfare to me!”
“Proposals to increase Social Security’s retirement age are beginning to resurface,” wrote Alicia Munnell. “The notion is that if people are living longer, they can work longer. But the retirement age has little to do with how long people work, and a lot to do with how much money they get. Increasing the retirement age is a benefit cut.”
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