Question

Which of the following is not allowed as an itemized deduction?

  

Gambling losses to the extent of gambling winnings

  

A subscription to the Wall Street Journal to help with personal investment decisions.

  

All are allowed as itemized deductions.

  

Interest expense on a $800,000 loan incurred in 2016 to buy a principal residence

  

Cash donation to a church

Fred and Lucy are married, ages 33 and 32, and together have AGI of $120,000 in 2019. They have four dependents and file a joint return. They pay $5,000 for a high deductible health insurance policy and contribute $2,600 to a qualified Health Savings Account.

During the year, they paid the following amounts for medical care: $9,200 in doctor and dentist bills and hospital expenses, and $3,000 for prescribed medicine and drugs. In October 2019, they received an insurance reimbursement of $4,400 for the hospitalization. They expect to receive an additional reimbursement of $1,000 in January 2020.

Determine the maximum itemized deduction allowable for medical expenses in 2019.

Use 7.5% of AGI not 10% for 2019.

  

$12,800

   

$0

   

$800

   

$3,800

   

$9,200

Brad, who would otherwise qualify as Faye’s dependent, had gross income of $9,000 during the year. Faye, who had

AGI of $120,000, paid the following medical expenses this year:

Cataract operation for Brad $ 5,400

Brad’s prescribed contact lenses 1,800

Faye’s doctor and dentist bills 12,600

Prescribed drugs for Faye 2,550

Total $22,350

Faye has a medical expense deduction of:

use 7.5% of AGI again....

  

$13,350

   

$10,350

   

$3,150

   

$4,940

Answer 1

ANSWER :-

A. Below  is not allowed as an itemized deduction :

A subscription to the Wall Street Journal to help with personal investment decisions.

Due to :- tax cut and jobs Act of , investment related expenses are no longer

all remaining statement is itemized deduction allowed as per tax cut and jobs Act so consider as allowed

B. Determine the Maximum itemized deduction allowable for medical expense in 2019 :

C. 3800

Medical Expense deduction for 2019
Doctor and dentist bills and hospital expenses		$9,200
Less : Insurance Reimbursement		-$4,400
Unreimbersument expenses		$4,800
Add : High deductible health insurance policy	$5,000
Add : prescribe medicines and drugs	$3,000	$8,000
Total medical expenses		$12,800
Less : 7.5 % of AGI ( 1,20,000 * 7.5% )		$9,000
Medical Expense deduction for 2019		$3,800

Note : - as per question instruction use 7.5% of AGI not 10% of AGI

• qualified Health saving Account for $ 2,600 is deduction for AGI so not consider in the Calculation of the deduction.

C.

• For Year 2019. AGI threshold for medical expense deduction is up to 7.5 %
• Total Expense = $ 22,350
• Medical Expense deduction = $ 22,350 - ( $ 1,20,000 * 7.5 %) = $ 13,350