Question

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Simpson, age 45, is a single individual who is employed full-time by Duff Corporation. This year Simpson reports AGI of $50,000 and has incurred the following medical expenses:

Dentist charges	$	900
Physician charges		1,800
Optical charges		500
Cost of eyeglasses		300
Hospital charges		2,100
Prescription drugs		250
Over-the-counter drugs		450
Medical insurance premiums (not through an exchange)		775

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

(THE ANSWER IS NOT $1,625)

b. Suppose that Simpson was reimbursed for $250 of the physician's charges and $1,200 for the hospital costs. Calculate the amount of medical expenses that will be included with Simpson's itemized deductions after any applicable limitations.

(THE ANSWER IS NOT $175)

Answer 1

a)All expenses are qualified medical expenses apart from two i.e.,cost of eyeglasses and over the counter drugs.Therefore,medical expense deduction of Simpson is $6325 less $5000(50000*10%)=$1325.Moreover,this item is included with Simpson's other itemized deductions.

b)Same as a.except medical expenses of simpson are first reduced by reimbursements $6325 less $775 then reduced by the floor limit $5000(50000*10%)=$550 and this amount is included with Simpson's other deductions.