Question

Simpson, age 45, is a single individual who is employed full time by Duff Corporation. This year Simpson reports AGI of $48,000 and has incurred the following medical expenses:

Dentist charges	$	985
Physician's charges		2,080
Optical charges		620
Cost of eyeglasses		795
Hospital charges		3,090
Prescription drugs		225
Over-the-counter drugs		670
Medical insurance premiums (not through an exchange)		810

Problem 7-22 Part a

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 $525 of the physician's charges and $1,645 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

Over the counter drugs are not deductible.

a

Deduction is:

Particulars	Amount
Dentist charges	985
Physician's charges	2,080
Optical charges	620
Cost of eyeglasses	795
Hospital charges	3,090
Prescription drugs	225
Medical insurance premiums (not through an exchange)	810
Eligible expenses	8605
Less 7.5% of AGI	3600
Deduction	5005

b

Deduction is:

Particulars	Amount
Dentist charges	985
Physician's charges	2,080
Optical charges	620
Cost of eyeglasses	795
Hospital charges	3,090
Prescription drugs	225
Medical insurance premiums (not through an exchange)	810
Total expenses	8605
Less reimbursements	2170
Eligible expenses	6435
Less 7.5% of AGI	3600
Deduction	2835