Question

Simpson is a single individual who is employed full-time by Duff Corporation. This year Simpson reports AGI of $57,000 and has incurred the following medical expenses:

Dentist charges	$	1,215
Physician's charges		2,165
Optical charges		935
Cost of eyeglasses		660
Hospital charges		2,300
Prescription drugs		455
Over-the-counter drugs		895
Medical insurance premiums (not through an exchange)		1,045

a. Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.

b. Suppose that Simpson was reimbursed for $640 of the physician's charges and $1,495 for the hospital costs. Calculate the amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.Calculate how much Dan can deduct for taxes as an itemized deduction this year.

Calculate how much Dan can deduct for taxes as an itemized deduction this year.

Answer 1

Answer

A.The amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations:

Particulars	Amount	Amount
Dentist charges	1215
Physician's charges	2165
Optical charges	935
Cost of eyeglasses	660
Hospital charges	2300
Prescription drugs	455
Medical insurance premiums	1045
Total Medical expenses		8775
Less:10% of AGI(57000*10%)		(5700)
Medical expenses itemized deduction		3075

Note:Over-the-counter drugs (drugs purchased without a prescription) are not deductible expenses.

B.

Simpson was reimbursed for $640 of the physician's charges and $1,495 for the hospital costs.The amount of medical expenses that will be included with Simpson’s itemized deductions after any applicable limitations.

Particulars	Amount	Amount
Total Medical expenses		8775
Less:Reimbursement of physician's charges	640
Reimbursement of hospital costs	1495	(2135)
Total Medical expenses after Reimbursement		6640
Less:10% of AGI(57000*10%)		(5700)
Medical expenses itemized deduction		940