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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29966
Experience:  Taxes, Immigration, Labor Relations
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What does Arizona allow deductions on taxes?

Resolved Question:

Arizona allows deductions for medical expenses on tax return that does not have the same rules and limits of Federal tax. Can one deduct medical insurance premiums for AZ tax? If so, any limit? I am an employee but also report some income on Schedule C. We get our health insurance from the employer's plans, but pay about $1000 per month and the employer pays about the same.
Submitted: 6 years ago.
Category: Tax
Expert:  Lev replied 6 years ago.


Hi and welcome to Just Answer!
You may itemize on your Arizona return, even if you do not itemize on your federal return.
To itemize on your Arizona return, you must first complete a federal Schedule A. Use Form 140, Schedule A, to adjust the amount shown on the federal Schedule A - see forms and instructions here -


You need to fill lines 1-6 to determine amount of medical expenses you will actually include into AZ itemized deduction -


In most cases, the deduction allowed on the Arizona return will be larger than the deduction allowed on the federal return. On your Arizona return, you do not have to reduce your medical expenses by a percentage of your federal adjusted gross income.
Complete lines 1 through 6 if you are deducting medical and dental expenses. In most cases, you may deduct more medical expenses on your Arizona return than you can deduct on your federal return.

Customer: replied 6 years ago.
HI Lev: Thanks, XXXXX XXXXX already knew all of that information. My question was specifically whether I can deduct the insurance premiums from my AZ taxes (as part of the medical deduction). As indicated in my question, I am employed and get my health plan via my employer and pay my insurance premiums (and the employer pays a substantial part of that). I do also report a small amount of income on schedule C. I have looked through the AZ code and cannot find this information. If you can answer it, I need to know where in the insurance code the information may be found. Thanks, Neil
Expert:  Lev replied 6 years ago.

Yes - medical insurance premiums are deducted as Medical expenses.
Definitions of medical expenses are same for federal and for AZ state income tax purposes.
See IRS publication 502 - , page 9 - Insurance Premiums.
Please be aware that you may only deduct health Insurance Premiums you paid if these amount were not excluded from your income.
If health Insurance Premiums were deducted out of your paycheck - it is likely - they were excluded from your income - please verify.
If these payments were not excluded from your income - you may deduct them.

Let me know if you need any help or clarification.

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