Question

Simpson, age 45, is a single individual who is employed full time by Duff Corporation. This year Simpson reports AGI of $51,000 and has incurred the following medical expenses: Dentist charges $ 955 Physician's charges 1,810 Optical charges 520 Cost of eyeglasses 345 Hospital charges 2,760 Prescription drugs 400 Over-the-counter drugs 890 Medical insurance premiums (not through an exchange) 895

a. Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.

b. Suppose that Simpson was reimbursed for $695 of the physician's charges and $1,310 for the hospital costs. Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.

Answer 1

ANSWER

a).

Except over-the-counter drugs, all other expenses are qualified expenses. Hence, Simpson’s medical expense deduction will be (($955 +$1,810 +$520+$345 +$2,760 +$400 +$895) - ($51,000*10% = $2,585 and this amount is included with Simpson’s other itemized deductions.

b).

Same as a. except Simpson’s medical expenses will reduce by reimbursements.

so,it will be $7,685 - $1,310 -$695 = $5,680

Then reduced by the floor limit $5,100 (51,000*10%) = $580.(5680-5100)

This amount will include with Simpson’s other itemized deductions.

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