Question

Tom Lewis, an individual taxpayer, had an adjusted gross income of $40,000 on his current-year tax return. He incurred the following medical expenses this year:

    Doctor fees for various illnesses              $5,000
    Prescription medicine and drugs                 1,000
    Medical insurance premiums                      3,000
    Over-the-counter cold medicine and vitamins       300

He received insurance reimbursements of $4,000 on the amounts. Under the tax regulations effective January 1, 2019, what is the net medical expense deduction that Tom may take for the current year as an itemized deduction?

$8,000

$8,300

$1,000

$1,300

Answer 1

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Answer is highlighted in yellow: Solution: $ 1,000 Answer: Explanation: Doctor fees for various illnesses Prescription medicine and drugs Medical insurance premiums Over-the-counter cold medicine and vitamins Allowable Expense Less: Insurance reimbursement Balance Floor: 10% of AGI (40000*10%) Allowable Deduction after Agi limit $ $ $ $ $ $ $ $ $ 5,000 1,000 3,000 - (not allowed) 9,000 4,000 5,000 4,000 1,000