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<ul class="summary-list"><li>Senate Republicans introduced their <keyword id="1754604" type="PERSON" weightage="60" keywordseo="coronavirus">coronavirus</keyword> relief bill on Monday, known as the HEALS Act (Health, Economic Assistance, Liability Protection, and Schools Act).</li><li>The proposal included another round of $1,200 stimulus checks, and <a href="https://www.businessinsider.com/600-unemployment-bonus-payments-dont-cause-less-work-yale-2020-7">reduced unemployment benefits</a>, and allocated $105 billion towards education — <a href="https://www.businessinsider.com/gop-coronavirus-stimulus-package-ties-two-thirds-school-funding-reopening-2020-7">two-thirds of the funding is tied to schools reopening</a> — another <a href="https://www.businessinsider.com/republicans-coronavirus-bill-military-spending-2020-7">$30 billion to military funds</a>, and $<a href="https://www.businessinsider.com/senate-gop-coronavirus-bill-provides-billion-for-a-new-fbi-building-2020-7">1.75 billion for a new FBI building</a>.</li><li>The act also suggested doubling the "three-martini lunch" deduction, a <keyword id="157771" type="ORGANIZATION" weightage="60" keywordseo="tax-deduction">tax deduction</keyword> for reimbursed business meals, from 50% to 100% of the meal.</li><li>However, the proposed bill does not expand the Supplemental Nutrition Assistance Program (<keyword id="24754" type="ORGANIZATION" weightage="60" keywordseo="snap">SNAP</keyword>), formerly known as <keyword id="730276" type="PERSON" weightage="60" keywordseo="Food-stamps">food stamps</keyword>, which provides food relief to millions of people facing food insecurity amid the ongoing coronavirus pandemic.</li><li>"They didn't have money for food stamps, but they had money for an FBI building just so that they can diminish competition for the president's hotel," House Speaker Nancy Pelosi said Monday evening in response to the proposal.</li></ul>Senate Republicans unveiled their coronavirus relief proposal on Monday, which doesn't expand the food stamps program.The $1 trillion relief bill, known as the HEALS Act (Health, Economic Assistance, Liability Protection, and Schools Act) included another round of $1,200 stimulus checks and <a href="https://www.businessinsider.com/600-unemployment-bonus-payments-dont-cause-less-work-yale-2020-7">reduced unemployment benefits</a> in comparison to its predecessor, the CARES Act (<keyword id="8907369" type="UNKNOWN" weightage="60" keywordseo="coronavirus-aid">Coronavirus Aid</keyword>, Relief, and Economic Security Act).It also allocated $105 billion towards education — though <a href="https://www.businessinsider.com/gop-coronavirus-stimulus-package-ties-two-thirds-school-funding-reopening-2020-7">two-thirds of the funding is tied to schools reopening</a> — another <a href="https://www.businessinsider.com/republicans-coronavirus-bill-military-spending-2020-7">$30 billion to military funds</a>, and $<a href="https://www.businessinsider.com/senate-gop-coronavirus-bill-provides-billion-for-a-new-fbi-building-2020-7">1.75 billion for a new FBI building</a>.It also proposes doubling a tax deduction on business meals, <a href="https://www.washingtonpost.com/business/2020/07/28/senate-gop-wont-extend-pandemic-food-stamps-doubles-three-martini-lunch-deduction/">The Washington Post</a> reported. Among the incremental inclusions in the proposal, the HEALS Act also suggested doubling the "three-martini lunch" deduction, a tax deduction for reimbursed business meals, from 50% to 100% of the meal, The Post reported.The proposed bill does not expand the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, which provides food relief to millions of people who bore the economic brunt of the coronavirus pandemic.It also did not extend the Pandemic Electronic Benefit Transfer (P-EBT) program — "a debit-card benefit for households with children who have temporarily lost access to free or reduced-price school meals," according to The Post. The program ended in June."They didn't have money for food stamps, but they had money for an FBI building just so that they can diminish competition for the president's hotel," House Speaker Nancy Pelosi said Monday evening in response to the proposal.A study by Feeding America, a nonprofit organization that houses a nationwide network of more than 200 food banks, projected that <a href="https://www.feedingamerica.org/about-us/press-room/feeding-america-study-projects-local-food-insecurity-rates-amid-pandemic-could">local rates of food insecurity in the US</a> could impact up to 1 in 3 adults and 1 in 2 children amid the pandemic.Hunger relief advocates slammed the proposal, saying the bill is "entirely divorced from the reality of the crisis this country is facing," Sarah Reinhardt, the lead food-systems and health analyst for the Food and Environment Program at Union of Concerned Scientists, told The Post."Given the national conversation about institutional racism and inequality, the decision is baffling," Luis Guardia, president of the Food Research and Action Center, told The Post."It's hard to think of a program that has SNAP's virtuous cycle of feeding people," Guardia continued. "That money turns over in the local economy quickly and creates more jobs, and ultimately if people have steady jobs, they aren't hungry."

Senate Republicans won't expand food stamps program in pandemic relief proposal. It does suggest doubling the 'three-martini lunch' tax deduction

<ul class="summary-list"><li>The <keyword id="1540087" type="PERSON" weightage="60" keywordseo="home-office-deduction">home office deduction</keyword> is only available to <keyword id="1014498" type="PERSON" weightage="60" keywordseo="self-employed">self-employed</keyword> people who use their home "regularly and exclusively" for business during the tax year.</li><li>If you meet those requirements, you may be entitled to a partial deduction for expenses like utilities, mortgage interest, depreciation, and insurance.</li><li>If you started <keyword id="889044" type="PERSON" weightage="60" keywordseo="working-from-home">working from home</keyword> in 2020 and qualify for the deduction, you can claim it next tax season.</li></ul>Millions of Americans have been working from home for months now as the country tries to contain the spread of the coronavirus — and they're the lucky ones. A record 50 million people have applied for <a href="https://www.businessinsider.com/personal-finance/unemployment-benefits-insurance-questions-answers-coronavirus-2020-4" target="_blank" rel="noopener">unemployment benefits</a> over the course of the pandemic, a painful marker of the economic destruction the crisis has caused.Working from home isn't the cake walk it may seem. With kids, spouses, and pets to attend to, it can be chaotic and stressful. But as employees hole up in their homes, many wonder whether there's a financial upside.A March 31 <a href="https://twitter.com/OmarVillafranca/status/1245186901977563139?s=20" target="_blank" rel="noopener">tweet posted by CBS News Correspondent Omar Villafranca</a> asks the questions likely on many people's minds: "Had a talk w/a friend, which ended w/questions: Since many news folks are working from home &amp; using their home as a studio, is there some sort of tax write-off? Electricity/internet/use of space? Any tax experts out there? Any WFH tax guru out there? Curious."<h2>You can only take the <keyword id="157771" type="ORGANIZATION" weightage="60" keywordseo="tax-deduction">tax deduction</keyword> if you work from home and you're self-employed</h2>There is indeed a tax deduction for home offices, but it's only available to self-employed people, Mike Savage, a CPA and the CEO of <a href="https://1800accountant.com/" target="_blank" rel="noopener">1-800Accountant</a>, told Business Insider. The Tax Cuts and Jobs Act (TCJA) suspended the home office deduction for employees for tax years 2018 to 2025."One of the principal requirements of the home office deduction is the space you use for business must be regularly and exclusively used for business," Savage said. "This means you cannot use the space for both business and personal. So, for example, if you use a room for work, that your family uses for personal use as well, it will not qualify." It must also be the principal location of your business.That's a high bar to meet for many people who don't normally <a href="https://www.businessinsider.com/taxes-tax-deductible-work-from-home-2019-4" target="_blank" rel="noopener">work from home</a> but have been forced to as companies go remote. If you are able to meet those requirements, you may be able to deduct part of the cost of rent, repairs, and utilities, or if you're a homeowner, mortgage interest, depreciation, property tax, and <a href="https://www.businessinsider.com/personal-finance/what-does-homeowners-insurance-cover" target="_blank" rel="noopener">insurance</a> on next year's tax return, Savage said.Lastly, the deduction is limited to your business' annual profit, he said. While you can't take the home office deduction if your business operated at a loss, you may be able to carry forward your expenses and take the deduction in the future, Savage added.The deduction can be calculated in two ways: the simplified method or the actual method. "Under the simplified method, taxpayers can calculate the amount of their home office deduction by multiplying their business square footage by $5 per a square foot, not to exceed 300 square feet," Savage explained. "Under the actual method, taxpayers can calculate the potential deductible amount by pro-rating their expenses with their business use," he said.But remember that if you started working from home in 2020, you won't be able to claim the deduction until next year, on your 2020 tax return.Here's a handy chart from the IRS that can help you figure out if you qualify for the home office deduction:<div type="image" title="IRS home office deduction" height="481" width="704" msid="76988349" hostid="261"></div><ul class="read-more-links"><li>Related Content Module: Countdown to Tax Day</li></ul>

There's a tax deduction for people working from home, but it won't apply to most remote workers during the pandemic

In India, every individual is expected to pay taxes corresponding to their <keyword id="47201" type="COMPANY" weightage="20" keywordseo="income">income</keyword>. But taxation laws in India also make room for certain provisions helping the individuals to save on taxes. Understanding tax deductions <keyword id="4327264" type="PERSON" weightage="20" keywordseo="income-tax-deductions">Income tax deductions</keyword> help trip down the taxpayer’s income that is subject to tax by reducing the overall liability. The amount that is deducted will depend on the type of tax deduction you claim. Some of the popular categories include medical expenses, charitable donations and tuition fees. You can also invest in schemes like retirement savings, life insurance and national saving scheme that have tax benefits. The ultimate purpose of such tax deductions is to stimulate the growth of commercial institutions and individuals. How do tax deductions help? Income tax deductions make it possible to reduce the taxable income thereby lowering the tax liability on the whole. This can lead to some gains by saving on taxes. The eligibility criteria for availing of tax benefits depend on a number of factors. Also the limits of these rebates are different for different purposes. Here are the types of income tax rebates available under the Indian Income Tax Act” Section 80-C This is one of the most popular kind of tax saving through investments. Section 80-CCC &amp; 80-CCD In this section, tax laws permit deductions on contributions made towards the pension funds of the individual. Section 80-TTA The provisions in this section is meant for the interest on saving accounts with banks. Section 80-CCG This section enables savings by investing in equity saving schemes. Section 80-D As per this section, the taxpayer can claim deductions for paying towards the medical insurance premiums. Section 80 DD &amp; Section 80 U Under this section, differently-abled people can avail of tax deductions on account of their disabilities. Section 80 E This section of the Income Tax Act gives room for saving on the interest on educational loan. Section 80 GGA, 80 GGB, 80 G &amp; 80 GGC All these sub-sections allow the taxpayer to claim deductions for the donations done to charitable causes. Section 80 GG This section is applicable for people living in rented homes and it makes it possible for them to claim deductions on the rental charges they pay. Take home Many day-to-day expenses we incur can quality us for income tax deductions. Therefore rebates can help save a good amount of money and make informed decisions when it comes to managing the spending.

All you need to know about income tax deductions in India

<ul class="summary-list"><li>Repealing a cap on the state and local taxes deduction would be "a giveaway to the rich," Rep. <keyword id="7018494" type="UNKNOWN" weightage="60" keywordseo="Alexandria-Ocasio-Cortez">Alexandria Ocasio-Cortez</keyword> said Thursday.</li><li>The Trump tax cut of 2017 slashed the SALT deduction to $10,000 from an unlimited amount.</li><li>Some Democrats want to get rid of the cap, as itemized deductions can be very high in blue states like New York and California.</li></ul>Rep. Alexandria Ocasio-Cortez, the democratic socialist known as "<keyword id="212097" type="ORGANIZATION" weightage="60" keywordseo="AOC">AOC</keyword>," is breaking with members of her party who want to undo a major part of Trump's 2017 tax cut, accusing them of favoring an unequivocal "giveaway to the rich."That would be the federal cap on the state and local tax (SALT) deduction, which some Democrats in high-income-tax states have been working to roll back for four years now.House Speaker Nancy Pelosi, for example, calls the cap on the SALT deduction "mean-spirited" and "politically targeted," arguing that former President Donald Trump's White House designed this <keyword id="28351" type="ORGANIZATION" weightage="60" keywordseo="policy">policy</keyword> to hurt the wealthy in blue states, in particular. Others even want to hold up one of President Joe Biden's top legislative priorities if they don't get their way. That would be the $2.3 trillion <keyword id="17408" type="PERSON" weightage="60" keywordseo="infrastructure">infrastructure</keyword> plan Biden unveiled this month, the first of a two-part package, which he would like to fund with tax revenue rather than deficit-finance."I don't think we should be holding the infrastructure package hostage for a 100% repeal of SALT," Ocasio-Cortez told Huff Post's Igor Bobic, according to a pool report. "I think we can have a conversation about the policy, but it's a bit of an extreme position, to be frank."The <keyword id="6358883" type="UNKNOWN" weightage="100" keywordseo="politics">politics</keyword> of SALT can be a bit confusing. In 2017, Republicans capped the SALT deduction at $10,000, a progressive reform in an otherwise regressive bill.But this particular giveaway - enabling taxpayers who itemize their returns to lower their bill to the IRS - has an unusually high number of liberal fans who argue that it only penalizes the better-off in parts of the country that have solidly Democratic governments (and their generally higher tax rates).The argument has flared up again as Congress debates Biden's $2.3 trillion infrastructure plan - and how to pay for it. So far, the White House has proposed partially rolling back another aspect of the 2017 tax cut, which slashed corporate tax rates from 35% to 21%; he wants to raise it back to 28%.But some in the president's party are threatening to oppose any legislation that does not also reduce some of the federal government's ability to collect taxes from those who claim the now-restricted SALT deduction."No SALT, no deal," Rep. Thomas Suozzi, another New York Democrat, <a href="https://thehill.com/policy/finance/545632-democrats-have-a-growing-salt-tax-problem">told The Hill</a>.Ocasio-Cortez, however, argued that it would not be "just" to simply abolish the cap."I think it's just a giveaway to the rich," she said, "and I think it's a gift to billionaires."Experts more or less agree. In a <a href="https://www.businessinsider.com/democrats-salt-tax-deduction-repeal-benefits-rich-opinion-2019-7">2019 piece for Insider</a>, Scott Eastman, federal research manager at the Tax Foundation, wrote that repealing the cap would "almost exclusively benefit wealthy taxpayers, making the tax code less progressive" - and depriving the federal government of money it will need to fund Democrats' agenda.Have a news tip? Email this reporter: <a href="mailto:cdavis@insider.com">cdavis@insider.com</a>

AOC calls SALT deduction a 'gift to billionaires,' opposes effort to hold up infrastructure bill

Justin Lambert/DigitalVision/GettyMoving expenses are no longer tax deductible for many Americans.<ul class="summary-list"><li>Moving expenses are no longer <a href="https://www.businessinsider.com/what-can-i-deduct-on-my-taxes">tax deductible</a> for federal <a href="https://www.businessinsider.com/category/tax-day-2020">tax</a> purposes for most Americans.</li><li>In order to deduct any moving expenses on your <a href="https://www.businessinsider.com/how-to-file-taxes-tax-return-instructions">federal tax return</a>, you must be an active member of the United States armed forces (or a dependent or spouse) and the expenses must be related to a permanent change of station.</li><li>Some states still allow moving expense deductions on state tax returns.</li><li>This post has been reviewed for accuracy by Thomas C. Corley, CPA.</li><li><a href="https://www.businessinsider.com/yourmoney?utm_source=bullet">Read more personal finance coverage</a>.</li></ul>Most Americans can no longer deduct moving expenses on their federal tax return. Before <a href="https://www.businessinsider.com/tax-day-2019-trump-gop-tax-cut-law-still-not-popular-2019-4">the Tax Cuts and Jobs Act</a> (TCJA), qualified moving expenses were considered an above-the-line deduction to reduce your taxable income, meaning you didn't have to itemize the deductions on your federal tax return; you could recoup the costs of relocating for work or to look for a new job and still take the standard deduction.Beginning with the 2018 tax year, the moving expense deduction has been suspended until the 2025 tax year, unless you're an active duty military member or their spouse or dependent. However, a handful of states, including California and New York, <a href="https://www.worldwideerc.org/news/most-states-have-now-acted-on-conforming-to-federal-suspension-of-moving-expense-deductionexclusion-an-update/">still allow moving expense deductions</a> on state tax returns.Also, for nonmilitary taxpayers, moving expenses for which you were reimbursed by your employer are now included in your gross income, unless the reimbursement was provided by the government for a permanent relocation. Reimbursements used to be excluded from gross income prior to the TCJA.<h2>Moving expenses may be tax deductible for active duty military</h2>In order to deduct expenses related to a move of residence on your 2019 tax return, you must meet two requirements:1. You are a member of the Armed Forces on active duty2. You relocate due to a permanent change of station The IRS defines "permanent change of station" as a move from your home to your first post of active duty; a move from one permanent post of duty to another; or a move from the last post of duty to home or a closer location in the US, which typically must occur within one year of ending active duty.A spouse or dependent of an imprisoned, deceased, or deserted military member may also qualify to deduct moving expenses.If you're moving to a location within in the US, qualifying expenses include costs of moving household goods and personal property, as well as gas, tolls, and parking if traveling by personal car. The cost of lodging during travel to the new home is also included, but meals and food are not.You can also deduct the cost of shipping your car, disconnecting utilities, and storing your belongings for up to 30 days before they are delivered to your new home in the US. For active duty military members who are moving to a permanent station outside the US, all the aforementioned expenses are deductible, plus the cost of storage for household goods and personal property for the entire time you're at your new location.To compute a moving expense deduction, use <a href="https://www.irs.gov/forms-pubs/about-form-3903">Form 3903</a> and follow the instructions to record it on <a href="https://www.irs.gov/forms-pubs/about-form-1040">Form 1040</a>. If you file your taxes online through a service like <a href="https://oc.brcclx.com/t/?lid=26666206&amp;cr=26186&amp;last_updated=1575340827" rel="nofollow">H&amp;R Block</a> or <a href="http://www.dpbolvw.net/click-6415797-10457934?sid=bipfi_moving-expenses-tax-deductible" rel="nofollow">TurboTax</a>, you should be able to record your expenses easily.<ul class="read-more-links"><li>More <a href="https://www.businessinsider.com/category/tax-day-2020">tax day</a> coverage:</li><li><a href="https://www.businessinsider.com/when-are-taxes-due-tax-filing-deadline-2019-1">When are taxes due?</a></li><li><a href="https://www.businessinsider.com/how-to-file-taxes-tax-return-instructions">How to file taxes for 2019</a></li><li><a href="https://www.businessinsider.com/what-is-a-tax-credit-definition-explainer">What is a tax credit?</a></li><li><a href="https://www.businessinsider.com/hr-block-vs-turbo-tax-2018-1">H&amp;R Block vs. TurboTax</a></li></ul>Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team. <h3>NOW WATCH: <a href="https://www.businessinsider.com/how-yule-log-became-christmas-tv-tradition-bizarre-wpix-fire-wood-burning-history-2017-12">The bizarre history of the Yule Log Christmas special</a></h3>

Are moving expenses tax deductible?

<ul><li>In some cases, the amount of tax deducted and the <keyword id="17506" type="General" weightage="20" keywordseo="tds" source="Orion">TDS</keyword> credit displayed in Form 26AS may not match.</li><li>If you find that TDS has not been deducted by your employer, or if there are other discrepancies, get it corrected.</li><li>If you face difficulty in resolving the issue, you can file an online complaint with the <keyword id="65338" type="General" weightage="20" keywordseo="income-tax-department" source="Orion">Income Tax Department</keyword>. </li></ul>If you are a salaried employee, the employer will deduct tax deducted at source (TDS) on your behalf, and provide the <keyword id="6354751" type="General" weightage="20" keywordseo="income-tax" source="Orion">income tax</keyword> department with specific information on the tax deducted. Form 26AS is a consolidated tax statement that provides details of various tax-related transactions, including TDS. <cmsannotation type="cmsannotation" annotationid="subhead" text="Discrepancy in tax deducted and TDS credit">Discrepancy in tax deducted and TDS credit</cmsannotation> In some cases, the amount of tax deducted, and the TDS credit displayed in Form 26AS may not match the actual amount. “This discrepancy can occur due to various reasons, such as the deductor failing to provide TDS details to the Income-tax Department, or deducting taxes using an incorrect Permanent Account Number. “Taxpayers are advised to verify the tax credit displayed in Form 26AS, and reconcile any differences, if present,” says Aashish Sharma, co- founder, and litigation head, Lex N Tax, a tax consultancy firm. Sometimes, the TDS may not have been deducted by the employer. “Generally, the employers provide the tax computation to the employees for their approval. The employees may raise any concerns regarding non-deduction of TDS to their employers in case no such TDS is deducted,” says Suresh Surana, Founder, RSM India, an audit, tax and consulting services provider. <cmsannotation type="cmsannotation" annotationid="subhead" text="Steps to view form 26AS">Steps to view form 26AS</cmsannotation> To check if your employer has deducted TDS, follow these steps. First, register on the Income Tax Department's portal by visiting their website, and completing the registration process. Once registered, log in to the e-Filing portal using your credentials. Look for the "View Form 26AS (Tax Credit)" option, which can be found under the e-file section. Confirm the disclaimer, and proceed by selecting the relevant tick box. Next, choose the assessment year for which you want to view Form 26AS. Remember that the assessment year usually corresponds to the financial year. Finally, you'll have two viewing options: downloading the Form 26AS statement as a PDF, or viewing it directly on the portal in HTML format. <cmsannotation type="cmsannotation" annotationid="subhead" text="What to do in case of a discrepancy">What to do in case of a discrepancy</cmsannotation> “If you find that TDS has not been deducted by your employer, or if there are discrepancies in the TDS details, you should take the following steps,” says Sharma. <cmsannotation type="cmsannotation" annotationid="subhead" text="Contact your employer:">Contact your employer: </cmsannotation>Reach out to your employer, and discuss the issue. Provide them with the necessary details, and supporting documents to rectify the situation. They should rectify the TDS deductions in their records, and provide you with updated Form 16. <cmsannotation type="cmsannotation" annotationid="subhead" text="File an online complaint:">File an online complaint:</cmsannotation> If your employer does not take appropriate action, or if you face difficulty in resolving the issue, you can file an online complaint with the Income Tax Department through their e-Filing portal. Look for the "File Grievance" or "File Complaint" option, and provide the required information. <cmsannotation type="cmsannotation" annotationid="subhead" text="Follow up with the IT Department:">Follow up with the IT Department: </cmsannotation>After filing the complaint, regularly check the status of your complaint on the e-Filing portal. The Income Tax Department will investigate the matter and take necessary action to rectify the TDS discrepancy. If you are unsure about the appropriate steps to take, or require further assistance, it is advisable to consult a tax professional, or seek guidance from a chartered accountant, or tax expert who can provide personalized advice based on your specific situation.

ITR filing: Your guide to Form 26AS and why you should check for TDS discrepancies

Inti St Clair/Getty Medical expenses are tax deductible if they exceed 10% of your <keyword id="7531063" type="UNKNOWN" weightage="20" keywordseo="Adjusted-gross-income">adjusted gross income</keyword>. <ul class="summary-list"><li>Some medical expenses are <a href="https://www.businessinsider.com/what-can-i-deduct-on-my-taxes">tax deductible</a>, including payments related to "the diagnosis, cure, mitigation, treatment, or prevention of disease," according to the IRS.</li><li>However, you can only begin to deduct medical expenses once they exceed 10% of your adjusted gross income (AGI) and you must itemize your deductions instead of taking the <keyword id="947001" type="ORGANIZATION" weightage="20" keywordseo="Standard-Deduction">standard deduction</keyword>.</li><li>For example, if your AGI - your gross income less any above-the-line deductions - is $60,000, the first $6,000 in medical expenses are not deductible.</li><li>Non-qualifying medical expenses include cosmetic surgery, gym memberships or health club dues, diet food, and non-prescription drugs (except for insulin). </li><li>This post has been reviewed for accuracy by Thomas C. Corley, CPA.</li><li><a href="https://www.businessinsider.com/yourmoney?utm_source=bullet">Read more personal finance coverage</a>.</li></ul>If you were burdened by sizable medical bills or health expenses during 2019, there may be some financial relief available to you come <a href="https://www.businessinsider.com/category/tax-day-2020">tax</a> season. Some medical expenses are tax deductible, under two general conditions: 1. Your qualifying medical expenses for the year exceed 10% of your adjusted gross income (AGI), which is your gross income less any above-the-line deductions 2. You itemize your deductions instead of taking the standard deduction If you file jointly with your spouse and/or claim dependents, typically everyone's medical expenses can be combined. <a href="https://www.businessinsider.com/what-can-you-deduct-on-taxes-tax-day-2018-11">Tax deductions</a> reduce your taxable income and lower your overall tax liability. While some deductions, like <a href="https://www.businessinsider.com/paying-off-student-loan-debt-mistakes">student loan</a> interest and <a href="https://www.businessinsider.com/how-to-open-an-ira-for-retirement">IRA</a> contributions, can be deducted from your gross income without itemization, medical and dental expenses require that you itemize your deductions on Form 1040, Schedule A. Only medical expenses that were paid out-of-pocket and not reimbursed by your <a href="https://www.businessinsider.com/how-to-get-health-insurance-cobra-medicaid-marketplace">health insurance plan</a> qualify as tax deductible. As far as what qualifies as "medical"? The IRS says "payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body." Here's a list of some common qualifying medical expenses (for an exhaustive list, <a href="https://www.irs.gov/publications/p502">see the IRS website</a>): <ul><li>Medications that require a prescription, including drugs to alleviate <keyword id="54964" type="PERSON" weightage="20" keywordseo="nicotine">nicotine</keyword> withdrawal, as well as over-the-counter insulin</li><li>Fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners</li><li>Inpatient hospital care or residential nursing home care, including the cost of meals and lodging</li><li>Inpatient treatment at a center for alcohol or drug addiction or participation in a smoking-cessation program</li><li>Cost of infertility treatments, including freezing eggs or sperm and in vitro fertilization</li><li>Birth control pills</li><li>Cost of a weight-loss program for a specific disease or diseases diagnosed by a physician, including obesity</li><li>Cost of laser eye surgery</li><li>Cost of reading or prescription eyeglasses, contact lenses, false teeth, hearing aids, crutches, wheelchairs, and for a guide dog or other service animal to assist a person with physical disabilities</li><li>Transportation primarily for and essential to medical care, such as fare for a taxi, bus, train, ambulance, gas used for transportation by personal car, or you can deduct 18 cents per mile for medical use of your car</li><li>Insurance premiums paid by you (not your employer) for policies that cover medical care, or limited amounts paid for a qualified <a href="https://www.businessinsider.com/what-is-long-term-care-insurance">long-term care insurance</a> policy and Medicare premiums</li><li>Fees for treatment at a health institute authorized by a physician to alleviate a physical or mental disability or illness</li><li>Cost of equipment installed in a home or improvements made to a home to accommodate a disability to the extent that they do not increase the value of the home</li></ul>Non-qualifying medical expenses include cosmetic surgery, gym memberships or health club dues, diet food, and non-prescription drugs (except for insulin). If you're self-employed and earned a profit during the tax year, you may be able to deduct premiums paid for medical, dental, or long-term care insurance for yourself, spouse, and any dependents, up to the amount of your net profit. Unlike the standard medical expense deduction, you don't need to itemize to take advantage - it's an adjustment to your gross income. If you aren't self-employed and review the IRS list of qualified medical expenses and determine that what you paid for medical expenses throughout the year exceeds 10% of your AGI, you should then compare the amount over that threshold - i.e. the amount you would itemize - to your standard deduction to decide which will result in the greatest tax liability reduction. For the 2019 tax year, the standard deduction is $12,200 for single filers, $18,350 for heads of household, and $24,400 for married taxpayers filing jointly. For example, let's say your AGI for 2019 is $60,000 and you had medical expenses totaling $12,000. The first $6,000 in medical expenses are not deductible due to the 10% of AGI threshold. With no other itemization, you would only reduce your taxable income by $6,000. If you claimed the standard deduction instead, you would reduce your taxable income by $12,200. If you file your taxes online through a service like <a href="https://linkto.hrblock.com/Rqo6N">H&amp;R Block</a> or <a href="http://www.tkqlhce.com/click-6415797-13149797?sid=bpfi_are-medical-expenses-tax-deductible">TurboTax</a>, it will usually ask whether you had excessive medical expenses throughout the year and guide you through itemization or even help you decide whether it's worth itemizing at all. If you're still unsure about what qualifies or want help with your specific situation, consult a tax professional. <ul class="read-more-links"><li>More <a href="https://www.businessinsider.com/category/tax-day-2020">tax day</a> coverage:</li><li><a href="https://www.businessinsider.com/when-are-taxes-due-tax-filing-deadline-2019-1">When are taxes due?</a></li><li><a href="https://www.businessinsider.com/how-to-file-taxes-tax-return-instructions">How to file taxes for 2019</a></li><li><a href="https://www.businessinsider.com/what-is-a-tax-credit-definition-explainer">What is a tax credit?</a></li><li><a href="https://www.businessinsider.com/hr-block-vs-turbo-tax-2018-1">H&amp;R Block vs. TurboTax</a></li></ul>Editor's note: This story has been updated to reflect the federal government's spending bill that passed in December 2019, which extends the medical expenses deduction threshold of 7.5% of AGI through tax year 2019, instead of increasing it to 10%. Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team. <h3>NOW WATCH: <a href="https://www.businessinsider.com/stop-using-champagne-flutes-this-is-the-best-way-to-drink-champagne-2017-12">Stop using champagne flutes - this is the best way to drink champagne</a></h3> <pre style="display: none;">function receiveMessage(event){ console.log(event.data.fullscreen); Android.fullscreen(event.data.fullscreen); }window.addEventListener("message", receiveMessage, false);</pre>

Are medical expenses tax deductible? Generally yes, under 2 conditions

The <keyword id="121964" type="General" weightage="80" keywordseo="central-board-of-direct-taxes" source="Orion">Central Board of Direct Taxes</keyword> (<keyword id="128665" type="General" weightage="80" keywordseo="cbdt" source="Orion">CBDT</keyword>) on Tuesday issued another circular to further clarify issues arising on deduction of tax at source under the newly-inserted Section 194-R in respect of benefits or perquisites provided to residents in cash or in kind in the course of business or profession. As per the circular, now bank and financial institutions need not <keyword id="14979018" type="General" weightage="20" keywordseo="DEDUCT-TAX" source="Orion">deduct tax</keyword> at source in respect of benefits provided to its borrowers by waiver of loan or advance by way of one-time settlement. Similarly, a company in which the public is substantially interested need not deduct tax at source while issuing <keyword id="50592" type="General" weightage="20" keywordseo="BONUS" source="Orion">bonus</keyword> or rights shares. The implication of this clarification will be that a company in which public is not substantially interested will be required to deduct tax at source while issuing bonus or rights shares despite such receipt of bonus or right shares being not taxable in the hands of the shareholders. The reasoning given in this circular for exempting a company in which the public is substantially interested from deduction of tax at source while issuing bonus or rights shares equally applies to a private company in which the public is not substantially interested, experts said. Experts say this circular may be fishing in troubled waters as it is differentiating between taxpayers. Experts also wonder if by doing that the legislative intent is being bypassed by such circulars. SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/india/news/amazon-moves-delhi-hc-against-1-lakh-ccpa-penalty-in-pressure-cooker-case/articleshow/94190091.cms">Amazon moves Delhi HC against ₹1 lakh CCPA penalty in pressure cooker case</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/thelife/personalities/news/regional-and-folk-singers-are-using-youtube-to-preserve-and-popularise-their-culture/articleshow/94179996.cms">Regional and folk singers are using YouTube to preserve and popularise their culture</a>

Pvt companies required to deduct tax at source while issuing bonus or rights shares

For better targeting of tax concessions and exemptions, <keyword id="25455" type="General" weightage="80" keywordseo="finance" source="Orion">Finance</keyword> Minister <keyword id="129243" type="General" weightage="80" keywordseo="nirmala-sitharaman" source="Orion">Nirmala Sitharaman</keyword> capped deduction from capital gains on investment in residential houses under sections 54 and 54F to Rs 10 crore. Another proposal with similar intent is to limit income tax exemption from proceeds of insurance policies with very high value, she said. <keyword id="15133706" type="General" weightage="80" keywordseo="vishal-yeole" source="Orion">Vishal Yeole</keyword>, Vice President of Business Advisory Services, Waterfield Advisors said the <keyword id="6358021" type="General" weightage="100" keywordseo="budget" source="Orion">Budget</keyword> has proposed to limit the maximum deduction under Section 54 and Section 54F to Rs 10 crore. Till now, there was no such limit and typically, high-net-worth individuals (HNIs) and <keyword id="827434" type="General" weightage="80" keywordseo="ultra" source="Orion">Ultra</keyword> high-net-worth individuals (UHNIs) would utilize this avenue to reduce their Capital Gains tax liability. The original intent of these exemption sections always had been to incentivize the Housing Sector and mitigate the shortage of housing. It was felt that the exemptions were not achieving the intended purpose and it is now proposed to substantially limit the arbitrage available on capital gains tax arising to HNIs/UHNIs, Yeola said. As per the Finance Bill, the existing provisions of section 54 and section 54F of the Income-tax, 1961 (the Act) allow deduction on the Capital gains arising from the transfer of long-term capital asset if an assessee, within a period of one year before or two years after the date on which the transfer took place purchased any residential property in India, or within a period of three years after that date constructed any residential property in India. For section 54 of the Act, the deduction is available on the long-term capital gain arising from the transfer of a residential house if the capital gain is reinvested in a residential house. In section 54F of the Act, the deduction is available on the long-term capital gain arising from the transfer of any long-term capital asset except a residential house, if the net consideration is reinvested in a residential house. The primary objective of sections 54 and section 54F of the Act was to mitigate the acute shortage of housing and to give impetus to house-building activity. However, it has been observed that claims of huge deductions by high-net-worth assessees are being made under these provisions, by purchasing very expensive residential houses. It is defeating the very purpose of these sections. In order to prevent this, it is proposed to impose a limit on the maximum deduction that can be claimed by the assessee under sections 54 and 54F to Rs 10 crore. It has been provided that if the cost of the new asset purchased is more than Rs 10 crore, the cost of such asset shall be deemed to be Rs 10 crore. This will limit the deduction under the two sections to Rs 10 crore. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/govt-announces-hike-in-basic-customs-duty-on-silver-to-10-to-check-imports/articleshow/97524509.cms">Govt announces hike in basic customs duty on silver to 10% to check imports</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/entertainment/news/pathaans-gross-box-office-collections-at-634-crore-in-7-days/articleshow/97524909.cms">Pathaan's gross box office collections at ₹634 crore in 7 days</a>

Budget blow to HNIs claiming huge deductions for expensive houses

<div class="KonaFilter image-container display-table"><div><div class="image on-image">Thomson Reuters</div></div></div><ul><li><a href="http://www.businessinsider.com/category/trump-tax-plan" target="_blank" rel="noopener">President Donald Trump's tax plan</a> could go into effect as early as January 1, 2018, if Republicans manage to pass their final tax reform bill.</li><li>Ahead of the looming changes, taxpayers can make <a href="http://www.businessinsider.com/last-minute-tax-moves-before-trumps-tax-plan-takes-effect-2017-12" target="_blank" rel="noopener">end-of-year tax moves</a> now, such as pre-paying their property taxes for next year.</li><li>If your property tax bill is greater than $10,000, you'll be able to deduct more by paying next year's bill early.</li></ul> It looks like the Republican tax plan might actually be passed before the end of the year.For taxpayers who itemize their deductions, that could mean an increased tax bill in 2018. But there are some things you can do now to <a href="http://www.businessinsider.com/last-minute-tax-moves-before-trumps-tax-plan-takes-effect-2017-12">prepare for the looming changes,</a> including maximizing your 2017 tax deductions while you still can. Under current tax law, you can deduct taxes paid to state and local governments, including property, income, and sales tax. But <a href="http://www.businessinsider.com/tax-reform-trump-senate-house-republican-tax-plan-explainer-2017-12/">both the House and Senate</a> propose eliminating the deductions for state and local taxes (SALT), and capping the property tax deduction at $10,000. Homeowners whose property tax bill is greater than $10,000 (and aren't subject to the alternative minimum tax) could save more money by paying next year's bill by December 31, 2017. That way, you can get the deduction for that payment when you file your 2017 taxes. This hack can be especially useful for homeowners in states with relatively high taxes, like New York, New Jersey, and California. Deducting the full amount of your current property tax bill in 2017 might provide an even larger tax benefit if your tax rate goes down next year under the new plan, according to the experts at TaxAudit, an audit defense service.For some, it might also be worth looking into whether it's possible to pay their SALT taxes before the end of the year.Among those who itemize deductions, Americans claimed an average of $27,053 in 2015. The most common deduction was for taxes paid, which includes the SALT deduction and the property tax deduction. In total, Americans deducted $539.8 billion in taxes paid - nearly twice the amount deducted in mortgage interest, the next most common deduction. <h2>What are property taxes?</h2>Property taxes are just that: taxes you pay on your property.There are <a href="https://www.hrblock.com/tax-center/around-block/offers/real-estate-vs-personal-property-tax/">two kinds</a> of property taxes, depending on the property's mobility:<ol><li>The real estate tax - for property that can't be moved, such as a house or land</li><li>The personal property tax - for property that can be moved, such as an RV or plane.</li></ol>To get the property tax deduction, you have to itemize your deductions. <h2>How do I pay property taxes?</h2>Property taxes are administered on a local level, so to pay early you'll have to check with your county to see how to do so.For example, if you live in New York City, <a href="http://www1.nyc.gov/site/finance/taxes/property-tax-bills.page">the Department of Finance's page on property taxes</a> explains how to pay electronically, by mail, or in person at any of its <a href="http://www1.nyc.gov/site/finance/about/contact-us-by-visit.page">Business Centers</a>. But keep in mind that if you own a home, your mortgage lender might pay your property taxes <a href="https://www.hrblock.com/tax-center/around-block/offers/real-estate-vs-personal-property-tax/">from an escrow account</a>. <h2>What is the SALT deduction?</h2>The state and local tax deduction (SALT) also has two parts:<ol><li>A deduction for property taxes</li><li>A deduction for either your state income taxes or the amount of state sales tax you paid.</li></ol>Just like with the property tax deduction, many of those who benefit from this deduction live in states like New York, New Jersey, and California. The two <a href="http://www.businessinsider.com/trump-tax-reform-state-local-deduction-gary-cohn-2017-4">largest beneficiaries </a>are higher earners and states with a lot of high-income residents, according to the Tax Policy Center. To get the property tax deduction, you have to itemize your deductions.<div class="KonaFilter image-container display-table"><div><div class="image on-image">Andy Kiersz/Business Insider</div></div></div><h2>How do I use the SALT deduction?</h2>Similar to property taxes, SALT is administered on a local level. Taxpayers are able to deduct the amount of state and local income taxes for the <a href="https://www.hrblock.com/tax-center/income/other-income/state-and-local-income-tax/">year</a> the taxes are paid - even if the taxes are technically earmarked for a different year.For example, the tax deadline for estimated tax payments for the 4th quarter of 2017 is not until January 15, 2018. Freelancers and business owners who pay taxes quarterly could prepay their 4th quarter taxes before December 31 to be able to take full advantage of the tax deduction this year. Pre-paying your state and local income taxes for next year may be possible, <a href="https://www.bogleheads.org/forum/viewtopic.php?t=233726">if you can get</a> your state to credit payments made before the end of this year to your 2018 estimated taxes. That way, you can deduct the payment on your 2017 federal income taxes. Taxpayers concerned about losing out on deductions should consult a tax adviser sooner rather than later, so as to maximize tax planning strategies available before the end of 2017 - and before tax reform goes into effect. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/what-the-senate-republicans-tax-plan-means-based-on-your-salary-house-trump-reform-deduction-wealthy-single-americans-2017-11">Here's what the Senate Republicans' tax plan means if you're making $25,000, $75,000, or $175,000 a year</a></h3> <div> </div> </div>

Americans are about to lose a tax deduction worth over $500 billion every year - here's what to do now before Trump's tax plan goes into effect

The deadline to file your <keyword id="19948101" type="General" weightage="20" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> is approaching fast, and Sana is perplexed. All of 23, she's just started earning and working at an MNC, earning Rs 7,00,000 per annum, and can't figure out which <keyword id="20301439" type="General" weightage="20" keywordseo="tax-regime" source="keywords">tax regime</keyword> would work best for her. If you're having the same concerns and can't seem to wrap your head around the <keyword id="19935168" type="General" weightage="20" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword>, here's a ready reckoner for you: When should I choose new tax regime? Think of choosing a tax regime as having to choose a friend in office. The <keyword id="8706677" type="General" weightage="20" keywordseo="old-tax-regime" source="Orion">old tax regime</keyword> is that aged, wise senior who has answers and hacks for everything. Want to get over with a boring project quickly? They will certainly have a trick up their sleeve! On the other hand, the new regime is far more chilled out, lax and is a no-nonsense person who wants nothing to do with long documents and longer meetings. The new regime was introduced in budget 2020 to simplify taxation, and offer lower rate of taxes as compared to the old regime. However, there's a catch. You cannot claim the 70+ exemptions and deductions that help bring down your taxable income and hence, reduce your tax liability. This option is exclusively available under the old tax regime. The main USP of this tax regime? Lower tax rates, and fuss of deductions! Consider this. If your income is within the range of Rs 5,00,000-Rs 12,00,000, and you have no investments, <keyword id="99916" type="General" weightage="20" keywordseo="house-rent-allowance" source="Orion">house rent allowance</keyword> (<keyword id="19944588" type="General" weightage="20" keywordseo="hra" source="keywords">HRA</keyword>), health/life insurance premiums or other such deductions to claim, the new tax regime would obviously make more sense to you, given the significant difference in tax liabilities (just 5% under new regime, and a whopping 20% in old regime for those in the Rs 5-6 lakh bracket!) <div type="image" title="Tax rates under old and new regime" msid="111685908" hostid="261"></div> So, if you're someone who hates complex tax calculations, wants minimal tax deductions, the new regime might just be for you! But remember, there are two conditions under which this new regime will be automatically chosen for calculating your taxes: <ul><li>If you keep procrastinating and don't file your <keyword id="6374875" type="General" weightage="20" keywordseo="ITR" source="Orion">ITR</keyword> till July 31, 2024</li><li>If you do not specifically opt for the old tax regime on your employer's HR portal</li></ul>Also, if you earn less than Rs 3,00,000 per annum, you are completely exempted from paying any tax at all. In the old regime, this basic limit is slightly lower at Rs 2,50,000. Also read: <a href="https://www.businessinsider.in/personal-finance/income-tax/all-you-need-to-know-about-the-new-tax-regime/articleshow/111578840.cms" data-type="tilCustomLink">All you need to know about the new tax regime</a> So, what do I get under this regime? Thanks to a rebate under Section 87A, if you earn up to Rs 7 lakh per annum, your tax liability (and Sana's as well) will effectively be zero. This is limited to Rs 5 lakh under the old regime. While a <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> of Rs 50,000 is available under both of them (so you can directly deduct Rs 50,000 from your total income before even beginning to calculate your tax liability), there are a lot more deductions and exemptions that this regime DOES NOT allow you to avail: <ul><li>Leave Travel Allowance (LTA)</li><li>House Rent Allowance (HRA) (Comes in handy if you're paying hefty rents in metros)</li><li>Interest on housing loan (on self-occupied property or vacant property)</li><li>Own contribution to NPS (If there's any)</li><li>Interest earned on savings bank A/Cs </li><li>Investments made in ELSS, PPF</li><li>Premiums paid towards life, health insurance policies</li></ul>As for the deductions that are allowed, that makes for a pretty small list: <ul><li>Transport allowances (only if you are specially abled)</li><li>Gifts of up to Rs 50,000</li><li>Employer’s contribution to your NPS account</li><li>Interest paid on home loan only on let-out property</li></ul>But that's the trade-off. You get to pay taxes at low rates, yes, but you also don't get to claim a whole lot other deductions. Notes CA Nitesh Buddhadev, "Which regime is beneficial for you depends upon the allowances and deduction available to you during a relevant financial year. So, if your total income from salary is Rs 10.5 lakh and if the aggregate of any of the deductions / allowances you can claim is less than Rs. 3.15 lakh, you should opt for the new tax regime. If you have not invested in multiple tax-savings scheme, the new regime will work better. So, don't make this decision in any haste. You can choose your tax regime only once in a financial year. And if your income from business or other professions, be even more careful, because this will then become a once in a lifetime choice for you (quite literally!). So, take a good hard look at your finances, and then decide what works best for you!

Confused about the new tax regime? Here's when you should opt for it

Thomson ReutersSenate Majority Leader McConnell.The latest effort by Republicans in the Senate to overhaul the US healthcare system could have an unexpected effect on deductibles (the money you pay before insurance kicks in): they could get so high they're actually more than the poorest Americans earn. That's a conclusion of the Congressional Budget Office's latest assessment of the new version of the <a href="https://www.budget.senate.gov/bettercare">Better Care Reconciliation Act.</a> The CBO estimates that by 2026 the second-lowest-priced plans (the silver plans, in the Obamacare marketplace) would have $13,000 deductibles. Under the Affordable Care Act currently, a deductible for the same plan would be $5,000 in 2026. The deductible would be more than the annual income of someone who is at 75% of the federal poverty level. Even for people who make $56,800, the deductible would make up 25% of their annual income. The ACA (Obamacare) guards against this by setting a limit for how much people can spend on healthcare on out-of-pocket expenses. In 2017, that's $7,150 for an individual. By 2026, the CBO said that will rise to $10,900, making the plans with the $13,000 deductible actually against the law unless those caps are changed. <h2>Facing higher deductibles</h2>But if the caps are changed, the increased deductibles would leave people on those plans on the hook for a lot more of their medical coverage.In general, high deductibles have become increasingly common in the past few years. A <a href="http://www.businessinsider.com/out-of-pocket-healthcare-payments-skyrocketing-2016-9">survey in September 2016 found that 51% of workers</a> had a plan that required them to pay up to $1,000 out of pocket for healthcare until insurance picks up most of the rest.You can think of a deductible as the amount of money you're expected to spend out of pocket before insurance kicks in and starts to pick up a portion of the tab. Say you have a plan with a $2,000 deductible. If you have a costly prescription or get in an accident and need to visit the emergency room, you're on the hook for the full cost up to that $2,000 mark. At that point, the insurer will pick up a percentage, meaning you'll still have to pay 15% of the bill if it's over $2,000. In the end, your medical bills would total $2,000 + 15% of the remaining cost. Premiums and doctor's <a href="https://www.cigna.com/individuals-families/copays-deductibles-and-coinsurance-explained">visit co-pays usually don't count toward deductibles</a>. Here's a real-world example: In 2016, Business Insider spoke to Janine LePere, whose family had a $7,000 deductible. Her son has Type 1 diabetes, and the cost of managing the disease - especially insulin that regulates his blood sugar - can be about <a href="http://www.businessinsider.com/costs-to-manage-type-1-diabetes-2016-9">$1,100 a month.</a> Because of the plan the family is on, that means that LePere has to pay that full $1,100 a month out of pocket until that $7,000 is hit. After that, the family still has to pay for some of the cost, but not the full amount. <h2>Why some people choose to have high-deductible plans</h2>Not all health plans have a deductible, though the <a href="http://www.kff.org/report-section/ehbs-2016-summary-of-findings/">majority of employees</a> in the US are on a plan that has one. For some, a plan with a high deductible (that is, <a href="https://www.healthcare.gov/glossary/high-deductible-health-plan/">one that is more than $1,300 for an individual</a> and $2,600 for a family) might be the right choice based on their healthcare needs. For others, the high-deductible plans are often the only affordable option. The high-deductible plans have become increasingly common over the past decade. In 2006, <a href="http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_152.pdf">only 4% of people</a> who worked were enrolled in a high-deductible health plan. In 2016, it was <a href="https://www.cdc.gov/nchs/data/nhis/earlyrelease/insur201609.pdf">up to 25%</a>. And the amount people are paying for deductibles is rising, as well. A Kaiser Family Foundation survey found that <a href="http://www.businessinsider.com/out-of-pocket-healthcare-payments-skyrocketing-2016-9">deductibles had gone up 63%</a> in the past five years - 10 times the rate of inflation.Because the Senate Republican bill wants to cut premiums, it's why the plans are expected to have $10,000+ deductibles. The higher the deductible amount, the <a href="https://www.healthcare.gov/choose-a-plan/plans-categories/">lower the monthly premium</a>. That's because you're shouldering more of the healthcare costs.But, say you're a relatively healthy individual with not too many healthcare expenses who still wants to be covered in case anything goes wrong: In that scenario, a plan with a high deductible might make the most sense. <h2>How do you pay for healthcare with a high-deductible plan?</h2>Because so many expenses are paid for out of pocket, people with high deductibles have the option to set up health savings accounts. The accounts allow you to <a href="https://www.healthcare.gov/glossary/health-savings-account-HSA/">set aside money pre-tax</a> for medical expenses. That way, with each paycheck you can accumulate funds that can one day be used to cover prescriptions, procedures, co-pays or other medical expenses. HSAs can also roll over year-to-year, so if you have a relatively healthy 2017, the funds in your account go toward 2018 and beyond. The health savings accounts are a favorite of Republicans, who view them as a way to<a href="http://www.beckershospitalreview.com/payer-issues/7-things-to-know-about-health-savings-accounts.html"> incentivize consumers to make more frugal healthcare choices</a>. However, that only works if there are funds in the account to start, which is often not an easy task. And right now, HSAs can't be used to pay for monthly premiums, though a <a href="http://www.businessinsider.com/senate-healthcare-bill-text-negotiations-2017-6">newer version of the Senate health bill might include some changes</a> to that effect. <h2>What high-deductible plans could do to the healthcare system</h2>As high deductible plans become more common and those deductibles continue to rise, the pressure will be on Americans to pay for medical costs out of pocket. The number of people who might become underinsured through these plans could place even more financial burden on the healthcare system. In the short-term, for people who are relatively healthy, the high deductible plans could cut costs for insurers. But for people who need more extensive coverage but can't afford it, the plans could have huge negative financial effects for them - and in turn, on the healthcare system as a whole. <h3>NOW WATCH: <a href="http://www.businessinsider.com/divided-family-donald-trump-election-undividing-america-2017-7">A mother and daughter stopped speaking after Trump was elected - here's their emotional first conversation 6 months later</a></h3> Please enable Javascript to watch this video

CBO: Under the latest Senate healthcare bill, deductibles could be more than some people earn

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Ty Wright/Getty Images</div></div></div>In selling their soon-to-be-released tax plan, Republicans have been leaning hard on what they say is a provision to cut and simplify taxes for the middle class: <a href="http://www.businessinsider.com/trump-tax-plan-raise-lowest-bottom-tax-rate-from-10-to-12-2017-9" target="_blank" rel="noopener noreferrer">Doubling the standard deduction</a> that income tax payers may take."You have to look at the plan in its entirety. It doubles the standard deduction, so in the end, even the lowest rates get a tax cut," <a href="https://www.reuters.com/article/us-usa-tax/trumps-tax-plan-to-propose-deep-u-s-rate-cuts-lacks-revenue-details-idUSKCN1C213M?il=0">Rep. Jim Renacci</a>, a Republican who sits on the tax-writing Ways and Means Committee, told Reuters.But a document <a href="https://www.axios.com/heres-the-gop-tax-reform-plan-2490159611.html" target="_blank" rel="noopener noreferrer">published by Jonathan Swan of Axios</a> shows this is badly misleading. The plan would increase the standardized deductions available to taxpayers by 15% or less.Meanwhile, taxpayers who still wouldn't take the standard deduction under the Republican plan - those who would instead deduct things like mortgage interest - would pay tax on more of their income than they do now.Here's the important fine print: "To simplify the tax rules, the additional standard deduction and the personal exemptions for taxpayer and spouse are consolidated into this larger standard deduction."Here's how that math works. Let's say you are single with no dependents, and you have a moderate income. Currently, you get to take the standard deduction ($6,350) and one personal exemption ($4,050). If you are 65 or older, you also get to take an additional standard deduction ($1,250). That adds to $10,400, or $11,650 if you're a senior citizen.The Republican plan would replace all these provisions with a single deduction of $12,000 ($24,000 for married couples.) That's a 15% increase - except for seniors, who get a 3% increase.And then your first dollar of taxable income would be subjected to a 12% tax rate, instead of the current 10%. But don't worry, the framework says "additional tax relief," as yet unspecified, will emerge for you during the committee process.For married couples, all the relevant amounts are doubled, under the current tax code and under the Republican proposal, so the percent changes would be the same.Meanwhile, taxpayers who itemize their tax deductions for things like mortgage interest and state and local taxes would pay tax on more of their income on the Republican plan. The Republican proposal says "most" itemized deductions would be abolished anyway, but those for mortgage interest and charitable giving would be retained.Currently, you get to take the personal exemption even if you also itemize deductions, but you only get to take the standard deduction if you forego itemize deductions. Combining these provisions into a single, standard deduction would mean itemizers lose their personal exemption and get nothing back - meaning they'll typically pay tax on an extra $4,050 of income if they're single, or $8,100 if they're married.Sad! <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/major-changes-apple-ios-iphone-11-2017-6">Here are all the major changes coming to your iPhone September 19</a></h3> <div> </div> </div>

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