Question

Paul, suffers from emphysema and severe allergies and, upon the recommendation of his physician, has a dust elimination system installed in his personal residence. In connection with the system, Paul incurs and pays the following amounts during 2018.

Doctor and Hospital Bills	2500
Dust Elmination System	10,000
Increase in Utility Bill due to system	450
Cost of Ceritifed Apprasial	300

In addition, Paul pays $750 for prescribed medicines.

The system has an estimated useful life of 20 years. The appraisal was to determine the value of Paul's residence with and without the system. The appraisal states that his residence was worth $350,000 before the system was installed and $356,000 after the installation. Paul's AGI for the year was $50,000.

a. What is the total of Paul's qualifying medical expenses for 2018?

b. What is his medical expense deduction for 2018?

*FOR 2018*

Answer 1

Answer a:

Residence was worth $350,000 before the system was installed

Residence was worth $356,000 after the installation.

Calculation of Qualified medical expenses:

Cost of dust elimination system = $10,000 - ($356,000 - $350,000) = $4,000

Doctor and Hospital Bills = $2,500

Increase in Utility Bill due to system = $450

Prescribed medicines = $750

Total Qualified medical expenses = $4,000 + $2,500 + $450 + $750 = $7,700

Paul's qualifying medical expenses for 2018 = $7,700

Answer b:

For 2018: Qualified medical expenses that exceed 7.5% of adjusted gross income for 2018 are allowed to be deducted.

Medical expense deduction for 2018 = Total qualified medical expense - AGI * 7.5%

= $7,700 - $50,000 * 7.5%

=$3,950

Medical expense deduction for 2018 = $3,950