Retirement & Financial Planning Report

Your year-end tax planning should include a tally of your unreimbursed medical expenses for 2009 so far. If they exceed 7.5 percent of your adjusted gross income (AGI), the excess will be deductible on your 2009 tax return. If you expect your AGI for 2009 to be about $80,000, for example, medical expenses over $6,000 (7.5 percent of $80,000) will be deductible.

If you’re already over the threshold for 2009, you can pay for uninsured medical, vision, and dental care with tax-deductible dollars before year-end. If you won’t reach the 7.5 percent mark, defer all elective health care outlays into 2010, when you might get a deduction. (If you are subject to the alternative minimum tax, the threshold for deductible medical expenses is 10 percent of AGI, not 7.5 percent.)

You should go through the same calculation for miscellaneous itemized deductions such as tax preparation fees and investment expenses. The threshold for tax deductions is 2 percent of AGI. If you are over the 2 percent level for 2009 already, make tax-deductible payments for investment publications by year-end; if you’re far below 2 percent for this year, wait until 2010 to pay. (If you are subject to the alternative minimum tax, you can’t deduct any miscellaneous expenses.)