Have you spent $28,000 or more this year on medical or nursing home expenses? Are you 65 or older? If the answer to both of those questions is yes, you may be eligible for a $2,800 tax credit on your New Mexico tax return according to CPA and tax specialist Craig M. Simons of RPC CPAs + Consultants LLC.
A 65 year old or older taxpayer who files an individual New Mexico income tax return, and who is not a dependent of another taxpayer, may claim a credit in an amount equal to $2,800 for medical care expenses. This credit can be declared by the taxpayer for themselves, or for the taxpayer’s spouse or dependent if those expenses equal $28,000 or more within a taxable year. Those expenses cannot be reimbursed or compensated for by insurance or otherwise (per state tax code NMSA Sect. 7-2-18.13).
This is a valuable credit for those who qualify due to the fact that it’s refundable, which means that even if you don’t owe a penny to the state before the application of the credit, you can claim the credit and the state will send you a check for $2,800.
Medical expenses that qualify are the same expenses that qualify under the Internal Revenue Code, including some or all nursing home expenses such as the cost of meals and lodging if the principal reason for being there is to receive the medical care available.
The easiest way to determine if you qualify for the credit is to add up all of your medical expenses for the year and then subtract reimbursements from Medicare and any private insurance you may have. If your total out-of-pocket expenses after reimbursements are $28,000 or more, you qualify.
This credit is even available to out-of-state residents who owe New Mexico income taxes. Any expenses for services provided by doctors, osteopaths, or psychologists qualify if the professionals providing those services are licensed or certified to practice in New Mexico.
This credit is claimed on line 23 of Section VI: Refundable Tax Credits on the form PIT-RC Rebate and Credit Schedule and on the form PIT-1 New Mexico Personal Income Tax Return on line 24. Attach the PIT-RC to your New Mexico income tax return. Be prepared to provide receipts for your medical expenses and any explanation from your physician or elder care facility should the Taxation and Revenue Department send you out a notice requesting proof of your expenses. This is not uncommon.
Additionally, if you’re eligible to claim this credit, you’re also eligible to claim the medical care expense exemption for persons 65 years or older reported on Schedule PIT-ADJ New Mexico Schedule of Additions, Deductions, and Exemptions, line 17 as an exemption from income.
Both the credit and the exemption are a huge benefit to New Mexico taxpayers 65 years or older with large medical expenses so consult your tax advisor if necessary.
This article provides general information about tax laws and consequences, but should not be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice.