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Dominique's total allowable medical expenses in 2019 were $4,200. Her net income was $70,000 and the...

Dominique's total allowable medical expenses in 2019 were $4,200. Her net income was $70,000 and the cut-off for the medical expense amount in 2019 was 3% of net income, or $2,353, whichever is less. What was her federal medical expense tax credit in 2019? The lowest federal tax rate was 15%.

a. $353

b. $277

c.$315

d. $630

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Answer #1

Answer : Correct Option is (c.) $315

Reason :

In order to get tax credit allowable medical expenditure must exceed  3% of net income, or $2,353, whichever is less.In this case this situation is satisfied therefore,

Tax Credit = {Total allowable Medical Expense - [ 3% of net income, or $2,353, whichever is less.]} * Federal tax rate

= {4200 - [(3% * 70000) or 2353 , whicever is less]} * 15%

= {4200 - [2100 or 2353,whichever is less]} 15%

= {4200 - 2100} * 15%

= $315

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