Question

16. Mary and Melvin have had a rough medical year. Their oldest son Merton (18 years old) contracted a super-bug that was unresponsive to antibiotics. After spending 15days in the ICA at the hospital, Merton was moved to a regular room to recover for an additional 8 days. Fortunately he has returned to full health. Megan (21 full-time student), their daughter, has had some issues with her eyes and has changed her eye prescription 4 times this year. Total out of pocket expenses for Merton were $37,000. Megan’s optometrist visits totaled $800, eyeglass frames $1,200, and lenses $1,600. Mary and Melvin have AGI of $175,000. They have $10,000 of other itemized deductions. What is their total itemized deduction amount?

Answer 1

Total Medical Expenses for the year = $37,000 + 800 + 1200 + 1600 (See Note)

= $ $40,600

7.5% of AGI = $13,125

So, Deductible Medical Expenses = In excess of 7.5% AGI

= 40,600 - 13,125

= $ $27,475

Total Itemised Deduction = $27,475 + $10,000

= $37,475

Note:-

As per IRS, a child who is of age 19 or 24 (full time student) can be claimed as dependents.

So, here Merton and Megan can be claimed as dependents in Mary and Melvin's return.

If you pay medical expense for a dependent, it is tax deductible. As per IRS, If you itemize your deductions for a taxable year on Form 1040, Schedule A.pdf, Itemized Deductions, you may be able to deduct expenses you paid that year for medical and dental care for yourself, your spouse, and your dependents. You may deduct only the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. You figure the amount you're allowed to deduct on Form 1040, Schedule A.

Deductible medical expenses may include but aren't limited to the following:

• Payments of fees to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners
• Payments for in-patient hospital care or residential nursing home care, if the availability of medical care is the principal reason for being in the nursing home, including the cost of meals and lodging charged by the hospital or nursing home. If the availability of medical care isn't the principal reason for residence in the nursing home, the deduction is limited to that part of the cost that's for medical care.
• Payments for acupuncture treatments or inpatient treatment at a center for alcohol or drug addiction, for participation in a smoking-cessation program and for drugs to alleviate nicotine withdrawal that require a prescription
• Payments to participate in a weight-loss program for a specific disease or diseases diagnosed by a physician, including obesity, but not ordinarily payments for diet food items or the payment of health club dues
• Payments for insulin and payments for drugs that require a prescription
• Payments made for admission and transportation to a medical conference relating to a chronic disease that you, your spouse, or your dependents have (if the costs are primarily for and essential to necessary medical care). However, you may not deduct the costs for meals and lodging while attending the medical conference
• Payments for false teeth, reading or prescription eyeglasses or contact lenses, hearing aids, crutches, wheelchairs, and for a guide dog or other service animal to assist a visually impaired or hearing disabled person, or a person with other physical disabilities
• Payments for transportation primarily for and essential to medical care that qualify as medical expenses, such as payments of the actual fare for a taxi, bus, train, ambulance, or for transportation by personal car, the amount of your actual out-of-pocket expenses such as for gas and oil, or the amount of the standard mileage rate for medical expenses, plus the cost of tolls and parking
• Payments for insurance premiums you paid for policies that cover medical care or for a qualified long-term care insurance policy covering qualified long-term care services. However, if you're an employee, don't include in medical expenses the portion of your premiums treated as paid by your employer under its sponsored group accident, health policy, or qualified long-term care insurance policy. Also, don't include the premiums that you paid under your employer-sponsored policy under a premium conversion policy (pre-tax), paid by an employer-sponsored health insurance plan (cafeteria plan) or any other medical and dental expenses unless the premiums are included in box 1 of your Form W-2.pdf, Wage and Tax Statement. For example, if you're a federal employee participating in the premium conversion program of the Federal Employee Health Benefits (FEHB) program, you may not include the premiums paid for the policy as a medical expense