Bob Adams is 42 years old. He deducted medical expenses on his U. S. individual
ID: 2420156 • Letter: B
Question
Bob Adams is 42 years old. He deducted medical expenses on his U. S. individual income tax return for 2014. For tax year 2014, his total medical expenses exceeded the 10-percent floor based on adjusted gross income by $4,750. His total itemized deductions for tax year 2014 exceeded the standard deduction he otherwise could have claimed by $8,624. In 2015, he received an unexpected reimbursement from his health insurance company of $8,890 for medical expenses he paid in 2014 and deducted on his U. S. individual income tax return for 2014. How much of this $8,890 reimbursement must he include in his gross income for 2015?Explanation / Answer
The amount of the reimbursement included by Bob should be equal to the lower of the actual reimbursement or the amount by which his total medical expenses exceeded the 10% floor excess of itemised deductions over standard deductions.
Since the lowest of these amounts is $ 4,750, hence the same needs to be included by him in his gross income for 2015.