Question

Tax return problem

Tax Return Problem 3 Keisha Sanders, a divorced single taxpayer and practicing attorney, lives at 9551 Oak Lane in Menifee, CA 92584. Her social security number is 412- 34-5670 (date of birth 2/27/1973). Keisha had qualifying health care coverage at all times during the tax year. Her W-2 contained the following information: 390

Answer 1

Actual costs follow:

Gasoline ($90 × 6) $540
Tolls ($10 × 6) 60
Parking ($20 × 6) 120
Total deduction $720

Use of the standard mileage rate in effect for the year gives this deduction:

Mileage (500 miles × $0.17/mile × 6) $510
Tolls ($10 × 6) 60
Parking ($20 × 6) 120
Total deduction $690

keisha would choose the standard mileage rate in this situation because it produces a higher
deduction. This is not always the case, however. In reality, the convenience and the lack of
receipt substantiation make the standard mileage rate more popular even though the deduction
of actual costs could be higher.

In addition to the mileage, the cost of meals and lodging at a hospital or similar institution
is deductible if the principal reason for being there is to receive medical care.19 Lodging near
the related medical facility is deductible as long as no significant element of personal pleasure,
recreation, or vacation is involved. The lodging expenditures are limited to $50 for each
night for each individual, and meals are not deductible.20
Long-Term Care
As the population ages, more funds will be spent providing long-term care for senior citizens.
Qualified long-term care services are medical, maintenance, and personal care services provided
to a chronically ill individual pursuant to a plan of care prescribed by a licensed health
care practitioner.
The general rule concerning the deductibility of nursing home or other long-term care
institution costs provides that amounts spent are deductible if the principal reason for the individual’s
stay is medical care as opposed to enjoyment or convenience. The entire cost of the
long-term institution is deductible as a medical expense if indeed that is the case. If full-time
medical care is not required, only the fee allocable to actual medical care is deductible, and
costs for food and lodging are nondeductible.21
Determining medical expenses is usually quite easy for the individual or client who keeps
good records. Generally, medical care providers supply the necessary receipts to document
the medical charges incurred in a hospital or doctor’s office. Other source documents for
medical charges include checkbook registers, bank records, and credit card statements. Be
careful, however, in taking a medical deduction for a check made out to a local drugstore that
sells items in addition to prescription drugs. The IRS may require an itemized receipt for the
prescription drugs. Pharmacy departments usually provide this information. Another major
item, which is easy to misclassify, is the payment of health insurance premiums. These are
deductible only if the taxpayer pays the premiums with after-tax funds (not in an employer
pretax plan).
Insurance for Medical Care or Long-Term Care
Premiums for medical insurance, such as major medical, hospitalization, dental, and vision
insurance, are deductible. This includes Medicare B premiums for voluntary supplemental
coverage, but it does not include Medicare A insurance payroll taxes withheld from the taxpayer’s
paycheck. Premiums for long-term care policies are deductible, subject to dollar limitations.
Deductible amounts for 201722 follow:

In addition to the mileage, the cost of meals and lodging at a hospital or similar institution
is deductible if the principal reason for being there is to receive medical care.19 Lodging near
the related medical facility is deductible as long as no significant element of personal pleasure,
recreation, or vacation is involved. The lodging expenditures are limited to $50 for each
night for each individual, and meals are not deductible.20
Long-Term Care
As the population ages, more funds will be spent providing long-term care for senior citizens.
Qualified long-term care services are medical, maintenance, and personal care services provided
to a chronically ill individual pursuant to a plan of care prescribed by a licensed health
care practitioner.
The general rule concerning the deductibility of nursing home or other long-term care
institution costs provides that amounts spent are deductible if the principal reason for the individual’s
stay is medical care as opposed to enjoyment or convenience. The entire cost of the
long-term institution is deductible as a medical expense if indeed that is the case. If full-time
medical care is not required, only the fee allocable to actual medical care is deductible, and
costs for food and lodging are nondeductible.21
Determining medical expenses is usually quite easy for the individual or client who keeps
good records. Generally, medical care providers supply the necessary receipts to document
the medical charges incurred in a hospital or doctor’s office. Other source documents for
medical charges include checkbook registers, bank records, and credit card statements. Be
careful, however, in taking a medical deduction for a check made out to a local drugstore that
sells items in addition to prescription drugs. The IRS may require an itemized receipt for the
prescription drugs. Pharmacy departments usually provide this information. Another major
item, which is easy to misclassify, is the payment of health insurance premiums. These are
deductible only if the taxpayer pays the premiums with after-tax funds (not in an employer
pretax plan).
Insurance for Medical Care or Long-Term Care
Premiums for medical insurance, such as major medical, hospitalization, dental, and vision
insurance, are deductible. This includes Medicare B premiums for voluntary supplemental
coverage, but it does not include Medicare A insurance payroll taxes withheld from the taxpayer’s
paycheck. Premiums for long-term care policies are deductible, subject to dollar limitations.
Deductible amounts for 201722 follow:

In addition to the mileage, the cost of meals and lodging at a hospital or similar institution
is deductible if the principal reason for being there is to receive medical care.19 Lodging near
the related medical facility is deductible as long as no significant element of personal pleasure,
recreation, or vacation is involved. The lodging expenditures are limited to $50 for each
night for each individual, and meals are not deductible.20
Long-Term Care
As the population ages, more funds will be spent providing long-term care for senior citizens.
Qualified long-term care services are medical, maintenance, and personal care services provided
to a chronically ill individual pursuant to a plan of care prescribed by a licensed health
care practitioner.
The general rule concerning the deductibility of nursing home or other long-term care
institution costs provides that amounts spent are deductible if the principal reason for the individual’s
stay is medical care as opposed to enjoyment or convenience. The entire cost of the
long-term institution is deductible as a medical expense if indeed that is the case. If full-time
medical care is not required, only the fee allocable to actual medical care is deductible, and
costs for food and lodging are nondeductible.21
Determining medical expenses is usually quite easy for the individual or client who keeps
good records. Generally, medical care providers supply the necessary receipts to document
the medical charges incurred in a hospital or doctor’s office. Other source documents for
medical charges include checkbook registers, bank records, and credit card statements. Be
careful, however, in taking a medical deduction for a check made out to a local drugstore that
sells items in addition to prescription drugs. The IRS may require an itemized receipt for the
prescription drugs. Pharmacy departments usually provide this information. Another major
item, which is easy to misclassify, is the payment of health insurance premiums. These are
deductible only if the taxpayer pays the premiums with after-tax funds (not in an employer
pretax plan).
Insurance for Medical Care or Long-Term Care
Premiums for medical insurance, such as major medical, hospitalization, dental, and vision
insurance, are deductible. This includes Medicare B premiums for voluntary supplemental
coverage, but it does not include Medicare A insurance payroll taxes withheld from the taxpayer’s
paycheck. Premiums for long-term care policies are deductible, subject to dollar limitations.
Deductible amounts for 201722 follow:

Age at Close of Taxable Year 2017 Amount
40 and under $ 410
More than 40, but not more than 50 770
More than 50, but not more than 60 1,530
More than 60, but not more than 70 4,090
Age 71 and over 5,110

Age at Close of Taxable Year 2017 Amount
40 and under $ 410
More than 40, but not more than 50 770
More than 50, but not more than 60 1,530
More than 60, but not more than 70 4,090
Age 71 and over 5,110

In the event that the long-term insurance contract pays periodic payments to an individual
who is chronically ill, any amount in excess of the per diem limit is in fact taxable. The per
diem rate for 2017 is $360.