Question

Mr. E, a 50-year old, single taxpayer, had an adjusted gross income of $10,000 for the current year. In addition, he paid the following expenses:

• Surgeon’s fee (outpatient.................................................... $600
• Psychiatrist fee..................................................................... 700
• Hospital bill as follows:
  Medical services................................................................ 300
     Meals in hospital.............................................................. 200
     Hospital room charge......................................................... 500
• Transportation to/from doctor’s office and hospital.................. 50
• Contact lenses...................................................................... 200
• Prescription drugs.................................................................. 80
• Vitamins for general health..................................................... 60
• Weight-loss program............................................................ 300
• Chiropractor’s fee................................................................ 400

Mr. E also paid $900 for medical insurance premiums and received reimbursement of $850 from the insurance company on claims for the above expenses. Compute Mr. E’s current-year medical deduction for Schedule A.

Answer 1

Medical Expense Deduction = $2,330

Explanation;  

Surgens Fee	$600
Psychiatrist's Fee	$700
Hospital Bills ($300+$200+$500)	$1,000
Transportation	$50
Contact Leses	$200
Prescription Drugs	$80
Chiropractors Fee	$400
Medical Insurance Premium	$900
Total	$3,930
Less: Insurance Reimbursement	$(850)
Total	$3,080
Less: 7.5 % of AGI	$(750)
Medical Expense Deduction	$2,330

Section 213 allows a deduction for medical care expenses to the extent that they exceed 7.5 % of adjusted gross income.