Question

If Janet refinances her home and takes out 75k in case from equity then spends the money on medical bills for her mothers care in the hospital.

What is the regular tax treatment of the 75K of payments for Janet's mothers medical expenses last year?

A) deductible as medical expenses subject to a 7.5% of AGI floor on Janets tax return

B) deductible as medical expenses subject to a 10% of AGI floor on Janets tax return

C) deductible as medical expenses subject to a 7.5% of AGI floor on Janets mothers tax return

D) not deductible at all because Janet’s mother did not pay for her own coverage

Answer 1

Assuming, medical expneses has been incurred in 2019 as last year.

Correct answer is option B.) i.e. deductible as medical expenses subject to a 10%% of AGI floor on Janets tax return

Explanation:-

As per IRS,you can deduct expenses you paid that year for medical and dental care for yourself, your spouse, and your dependents. You may deduct only the amount of your total medical expenses that exceed 10% of your adjusted gross income in 2020 for expenses incurred in last year 2019.