ExpertHard1 markMultiple Choice
CPA · Question 27 · Area 3: Individual Taxation
Taxpayer (AGI 0,000) incurred the following medical expenses: Doctor bills ,000; Cosmetic surgery (elective) ,000; Prescription drugs ,000; Health insurance premiums (after-tax) ,000. Insurance reimbursed ,000. What is the deductible medical expense amount on Schedule A?
Taxpayer (AGI 0,000) incurred the following medical expenses: Doctor bills ,000; Cosmetic surgery (elective) ,000; Prescription drugs ,000; Health insurance premiums (after-tax) ,000. Insurance reimbursed ,000. What is the deductible medical expense amount on Schedule A?
Answer options:
A.
0
B.
,500
C.
,000
D.
,000
How to approach this question
1. Sum Qualified Expenses (No cosmetic). 2. Subtract Reimbursements. 3. Calculate Floor (7.5% AGI). 4. Result = Net Expenses - Floor.
Full Answer
A.0✓ Correct
Deductible medical expenses must be qualified (excluding elective cosmetic surgery), reduced by insurance reimbursements, and then reduced by 7.5% of AGI. ,000 qualified - ,000 reimbursed = ,000. Floor = ,500. Result < 0, so 0 deduction.
Common mistakes
Including cosmetic surgery or forgetting to subtract insurance reimbursements.
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