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Special Oregon medical subtraction (ORS 316.693)

Introduction

New for tax year 2013, the special Oregon medical deduction is no longer available. The deduction has been replaced with a subtraction that is limited to a maximum of $1,800 per taxpayer age 62 or older on December 31, 2013, with qualifying medical and dental expenses.

If you or your spouse/RDP are age 62 or older on December 31, 2013 and have qualifying medical and/or dental expenses, you may qualify for the special Oregon medical subtraction. See IRS Publication 502 for types of qualifying medical and dental expenses. You cannot subtract medical or dental expenses:

•    For anyone under age 62;
•    For dependents, regardless of their age; or
•    That have already been deducted on the return.

You may not claim a subtraction if your federal adjusted gross income is $200,000 or more ($100,000 or more for those who file as single or married/RDP filing separately). Use the worksheet and table below to determine the amount of your subtraction.

If you qualify for the subtraction, you will report it as an “other subtraction” on line 18 of your Form 40, or line 37 of your Form 40N or 40P, using subtraction code 351.


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Shared expenses

Did you have medical and/or dental expenses for more than one person? If so, you must determine which expenses belong to each qualifying taxpayer. Start by totaling all expenses for each qualifying taxpayer. If you have expenses that are for more than one person, such as premiums for a shared insurance policy, split the expenses by the most reasonable method. A reasonable method for splitting the shared costs of an insurance policy includes splitting the total cost of the policy by the number of individuals covered. For example, divide the premiums for an insurance policy covering two adults by two. If the number of children covered on an insurance policy does not affect the price of the policy, it is reasonable to count all children on the policy as one individual. For example, divide the premiums for a policy covering two adults and four children by three.

Read examples one and two below for real life scenarios.
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Medical subtraction worksheet instructions

Line 1: Medical and dental expenses for each taxpayer  –  Enter the expenses attributable to each taxpayer. See “Shared expenses” above for information about splitting expenses, such as insurance premiums.

Line 1, column (A): If you were age 62 or older on December 31, 2013, enter your total qualifying medical and dental expenses. If your medical expenses were not included in your itemized deductions (Schedule A, line 1), or you didn’t itemize your deductions, skip lines 2 - 4, enter the amount from line 1 on line 5, and go to line 6. If you don’t have qualifying expenses or were not age 62 or older on December 31, 2013 – STOP – do not complete column (A). You do not qualify for the subtraction.

Line 1, column (B): If your spouse/RDP was age 62 or older on December 31, 2013, and you’re filing jointly, enter your spouse’s/RDP’s total qualifying medical and dental expenses. If your spouse’s/RDP’s medical expenses were not included in your itemized deductions (Schedule A, line 1), or you didn’t itemize your deductions, skip lines 2 - 4, enter the amount from line 1 on line 5, and go to line 6. If your spouse/RDP does not have qualifying expenses or was not age 62 or older on December 31, 2013 – STOP – do not complete column (B). Your spouse/RDP does not qualify for the subtraction.

Line 2, columns (A) & (B): Total medical and dental expenses - Enter the total medical and dental expenses you claimed as an itemized deduction (Schedule A, line 1), even if they are for a spouse/RDP or dependent that doesn’t qualify. If your spouse/RDP meets the age requirement and has qualifying expenses, enter this amount on line 2, column (B).

Line 3, columns (A) & (B): Divide line 1 by line 2 for column (A) if you qualify, and/or column (B) if your spouse/RDP qualifies, and round to three decimal places. For example: 0.7308 is rounded to 0.731

Line 4, columns (A) & (B): Enter the lesser of the medical and dental expenses claimed on line 1 of your Schedule A or the amount claimed on line 3 of your Schedule A. If your spouse/RDP qualifies, enter the same amount in column (B). 

Line 5, columns (A) & (B): Multiply line 3 and line 4 for each column and round to whole dollars. For example: $101.49 is rounded to $101. If you did not itemize your deductions, enter the amount from line 1 of this worksheet.

Line 6, columns (A) & (B): Enter the maximum allowable medical subtraction for your filing status and federal adjusted gross income from the table below. Do not enter more than $1,800. If your spouse/RDP qualifies, enter the same amount in column (B). 

Line 7, columns (A) & (B): Enter the lesser of line 5 or line 6 for each column.

Line 8: Add the amounts from line 7 column (A) and column (B). This is your special Oregon medical subtraction. Enter this amount as an “other subtraction” on line 18 of your Form 40, or line 37 of your Form 40N or 40P, using subtraction code 351.
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Medical subtraction worksheet

Column (A)
You

Column (B)
Spouse/RDP
​1. Medical and dental expenses for each qualifying taxpayer.
​1._________ ​1._________
​2. Total medical and dental expenses (Schedule A, line 1). ​2._________ ​2._________
​3. Divide line 1 by line 2 and round to three decimal places.
​3._________
​3._________
​4. Enter the lesser of the expenses claimed on line 1 of your
Schedule A, or the amount claimed on line 3 of your Schedule A.
​4._________ ​4._________
​5. Multiply line 3 by line 4 and round to whole dollars. ​5._________ ​5._________
​6. Maximum allowable medical subtraction from the table ($1,800 max).
​6._________ ​6._________
​7. Enter the lesser of line 5 or line 6.
​7._________ ​7._________
​8. Add line 7, columns (A) and (B), and enter the total. This is your special Oregon medical subtraction.
​8._________
  
       
If your filing status is...   ​

And your federal adjusted gross income from line 8 of Form 40 or line 30F of Form 40N or 40P is:

Then your maximum allowable medical subtraction per taxpayer meeting the age requirement is:​
​at least but less than
​Married/RDP filing jointly, or Head of household, or Qualifying widow(er) ​ ​ ​ ​$0 ​$50,000 ​$1,800
​$50,000 ​$100,000 ​$1,400
​$100,000 ​$200,000 ​$1,000
​$200,000 or more ​ ​$0
​Single or Married/RDP filing separately ​ ​ ​ ​$0 ​$25,000 ​$1,800
​$25,000 ​$50,000 $1,400​
​$50,000 ​$100,000 ​$1,000
$100,000 or more​ ​ ​$0
 
  


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Examples

Example 1 

Chloe and Sam were ages 63 and 58 on December 31, 2013. They filed a joint return with one dependent (Sam’s mother), federal adjusted gross income of $55,000, and itemized deductions for Oregon. During 2013, they paid $5,700 in medical expenses. Of that, they paid $1,300 for Chloe’s expenses and $1,100 for Sam’s expenses. They also paid $1,300 for Sam’s mother and $2,000 in premiums for a joint insurance policy for Chloe and Sam. Only Chloe’s expenses of $2,300 ($1,300 + $1,000 for half of the insurance premiums) qualify for the special Oregon medical subtraction because Sam does not meet the age requirement and Sam’s mother is a dependent.

 

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Example 2 

Peter is 63 years old, self-employed, and itemizes his deductions for Oregon. Peter claimed $3,200 in medical expenses on federal Schedule A and $2,500 on his federal Form 1040 for self-employed medical insurance premiums. Peter was able to deduct 100% of his self-employed medical insurance premiums on his federal return. Only the medical expenses Peter claimed on Schedule A will be used to calculate his special Oregon medical subtraction because they have not been fully deducted. To calculate his subtraction, Peter’s total qualifying medical and dental expenses are $3,200, the amount claimed on Schedule A. The worksheet will help him calculate the amount of his subtraction.

 

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Example 3 

Leah and Tyler are ages 62 and 59 on December 31, 2013.  They file a joint return with federal adjusted gross income of $35,000 and itemize their deductions for Oregon.  During 2013, they paid $4,700 in medical and dental expenses claimed on Schedule A, line 1. Of that, $1,600 are Leah’s expenses, $2,000 are Tyler’s expenses, and $1,100 are premiums for a medical insurance policy covering both of them.  Only Leah’s expenses qualify for the special Oregon medical subtraction since she met the age requirement as of December 31, 2013.  Leah’s expenses are $1,600 plus $550 for her share of the premiums for a total of $2,150. Leah and Tyler will use the special Oregon medical subtraction worksheet to calculate their subtraction as follows:

 

Column A
Leah
Column B
Tyler
​1. Medical and dental expenses for each qualifying taxpayer.
​1.$ 2,150  ​1._______
​2. Total medical and dental expenses (Schedule A, line 1). ​2.$ 4,700 
​2._______
​3. Divide line 1 by line 2 and round to three decimal places.
​3.   0.457
​3._______
​4. Enter the lesser of the expenses claimed on line 1 of your Schedule A, or the amount claimed on line 3 of your Schedule A. ​4.$ 3,500  ​4._______
​5. Multiply line 3 by line 4 and round to whole dollars. ​5.$ 1,600  ​5._______
​6. Maximum allowable medical subtraction from the table ($1,800 max).
​6.$ 1,800  ​6._______
​7. Enter the lesser of line 5 or line 6.
​7.$ 1,600  ​7._______
​8. Add line 7, columns (A) and (B), and enter the total. This is your special Oregon medical subtraction.
​8.$ 1,600 
 
Leah and Tyler will claim $1,600 on line 18 of their Oregon Form 40 using subtraction code 351.


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Example 4 
 
Kenneth and Sophia were both age 66 on December 31, 2013 and file a joint return with federal adjusted gross income of $78,000.  Kenneth and Sophia had $12,300 in unreimbursed medical and dental expenses during 2013.  They are self-employed and claimed $3,400 for self-employed health insurance premiums on line 29 of their federal Form 1040. They also claimed $8,900 on line 1 of their federal Schedule A.  Of the amount claimed on Schedule A, $1,200 was for Kenneth’s expenses and $7,700 was for Sophia’s expenses. Kenneth and Sophia can claim $2,190 as a special Oregon medical subtraction calculated as follows:
 
Column A 
Kenneth
Column B 
Sophia
​1. Medical and dental expenses for each qualifying taxpayer.
​1.$ 1,200  ​1.$ 7,700
​2. Total medical and dental expenses (Schedule A, line 1). ​2.$ 8,900 
​2.$ 8,900
​3. Divide line 1 by line 2 and round to three decimal places.
​3.  0.135 
​3.  0.865 
​4. Enter the lesser of the expenses claimed on line 1 of your Schedule A, or the amount claimed on line 3 of your Schedule A. ​4.$ 5,850 
​4.$ 5,850 
​5. Multiply line 3 by line 4 and round to whole dollars. ​5.$    790  ​5.$ 5,060 
​6. Maximum allowable medical subtraction from the table ($1,800 max).
​6.$ 1,400  ​6.$ 1,400 
​7. Enter the lesser of line 5 or line 6.
​7.$   790   ​7.$ 1,400
​8. Add line 7, columns (A) and (B), and enter the total. This is your special Oregon medical subtraction.
​8.$ 2,190 
 
Because Kenneth and Sophia were able to deduct the entire amount of their self-employed health insurance premiums on their federal return, they do not include that amount in the calculation for their special Oregon medical subtraction. Their subtraction is limited to the lesser of the amount allowed from the table for each individual, or their own medical expenses that have not been previously deducted. Kenneth and Sophia’s subtraction is $2,190 ($790 of Kenneth’s expenses that have not been previously deducted, and $1,400, the maximum amount allowed Sophia).


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Example 5
 
Margaret is age 67 on December 31, 2013, single, and has a federal adjusted gross income of $27,000.  During 2013, Margaret paid $1,200 in qualifying medical expenses for herself, and $1,600 in medical expenses for her dependent 9-year-old granddaughter. Margaret does not itemize her deductions because her standard deduction is greater than her itemized deductions for Oregon. Margaret uses the worksheet to calculate her special Oregon medical subtraction as follows:

 

Column A 
Margaret
​Column B 
Spouse/RDP
​1. Medical and dental expenses for each qualifying taxpayer.
​1.$ 1,200  ​1.           
​2. Total medical and dental expenses (Schedule A, line 1). ​2.            
​2.           
​3. Divide line 1 by line 2 and round to three decimal places.
​3.            
​3.           
​4. Enter the lesser of the expenses claimed on line 1 of your Schedule A, or the amount claimed on line 3 of your Schedule A. ​4.           
4.           
​5. Multiply line 3 by line 4 and round to whole dollars. ​5.$ 1,200  ​5.           
​6. Maximum allowable medical subtraction from the table ($1,800 max).
​6.$ 1,400  ​6.           
​7. Enter the lesser of line 5 or line 6.
​7.$ 1,200  ​7.           
​8. Add line 7, columns (A) and (B), and enter the total. This is your special Oregon medical subtraction.
​8.$ 1,200
The medical expenses paid by Margaret for her 9-year-old granddaughter do not qualify for the subtraction because she is a dependent.


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