Can I deduct medical expenses with zero income?


Q. My income dropped to zero due to an illness and subsequent disabled status. Can I still take deductions for medical expenses?
— Planning ahead

A. We hope you’re feeling better.

You didn’t say, but if you are single and your income is truly zero, you can still claim medical itemized deductions on your income tax return.

But, there will be zero income tax benefit of doing so, said Michael Maye, a certified financial planner and certified public accountant with MJM Financial in Gillette.

That’s because itemized deductions are used to decrease taxable income and if there is no taxable income, there’s nothing to reduce, he said.

“If the reader is married and filing jointly with their spouse, then itemizing their medical expenses could in fact still provide a tax benefit if the couple has taxable income,” he said.

Maye said if your income is zero, you are not even required to file an income tax return.

But, he said, even if an individual has zero income, they may still want to file an income tax return.

“The reason an individual with zero income may still want to file a tax return is because of certain tax credits that are not income based — called ‘refundable tax credits’ — which a taxpayer may receive even with zero income,” Maye said. “One example of a refundable tax credit is the healthcare premium tax credit that subsidizes health insurance purchased through the Health Insurance Marketplace.”

Finally, Maye said, you need to determine whether your income will really be zero if you are receiving disability payments from an employer.

Taxability of employer disability payments hinges on who made the premium payments and also whether they were made with pre-tax or after-tax dollars, he said.

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