Simpson is a single individual under 65 who is employed full-time by Duff Corpor
ID: 2426633 • Letter: S
Question
Simpson is a single individual under 65 who is employed full-time by Duff Corporation. This year Simpson reports AGI of $54,200 and has incurred the following medical expenses:
1,015
Calculate the amount of medical expenses that will be included with Simpson's itemized deductions after any applicable limitations.
Suppose that Simpson was reimbursed for $555 of the physician's charges and $1,940 for the hospital costs. Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.
Dentist charges $ 1,410 Physician's charges 1,890 Optical charges 525 Cost of eyeglasses 465 Hospital charges 2,300 Prescription drugs 385 Over-the-counter drugs 695 Medical insurance premiums (not through an exchange)1,015
Explanation / Answer
Dentist charges
$
1,410
Physician's charges
1,890
Optical charges
525
Cost of eyeglasses
465
Hospital charges
2,300
Prescription drugs
385
Medical insurance premiums (not through an exchange)
1,015
MEDICAL EXPENSES
$
7,990
Medical expenses $ 7,990
Explanation: a. All expenses are qualified medical expenses except for the over-the-counter drugs. Hence, Simpson's medical expense deduction is $7,990 less $4,065 (7.5 percent × 54,200) = $3,925 and this amount is included with Simpson's other itemized deductions.
b. Same as a. except Simpson's medical expenses are first reduced by reimbursements $7,990 less $2,495 then reduced by the floor limit $4,065 (7.5 percent × 54,200) = $1,430 and this amount is included with Simpson's other itemized deductions.
Dentist charges
$
1,410
Physician's charges
1,890
Optical charges
525
Cost of eyeglasses
465
Hospital charges
2,300
Prescription drugs
385
Medical insurance premiums (not through an exchange)
1,015
MEDICAL EXPENSES
$
7,990