Question

Required information (The following information applies to the questions displayed below.) Simpson, age 45, is a single individual who is employed full-time by Duff Corporation. This year Simpson reports AGI of $51,000 and has incurred the following medical expenses: $1,680 2,310 720 Dentist charges Physician charges Optical charges Cost of eyeglasses Hospital charges Prescription drugs Over-the-counter drugs Medical insurance premiums (not through an exchange) 640 3,000 365 705 975 a. Calculate the amount of medical expenses that will be included with Simpson's itemized deductions after any applicable limitations. Medical expenses

Answer 1

Answer:

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

Total qualifying medical expenses:

Particulars	Amount
Dentist charges	$1,680
Physician charges	$2,310
Optical charges	$720
Cost of eyeglasses	$640
Hospital charges	$3,000
Prescription drugs	$365
Medical insurance premium ( not through an exchange)	$975
Total qualifying medical expenses	$9,690

Over-the-counter drugs will not include in qualifying medical expenses.

The amount of medical expenses that will be included with Simpson’s itemized deduction

Particulars	Amount
Total medical expenses	$9,690
Less : 10% of AGI (10% × $51,000) (Notes 2)	$5,100
Amount included with Simpson's itemized deduction	$4,590

b.Calculation of the amount of medical expenses that will be included with Simpson's itemized deductions after any applicable limitations.

Particulars	Amount
Total qualifying medical expenses(as shown above in a.)	$9,690
Less: Reimbursements (Notes 1)	$1,450
Less: 10% Of AGI ( 10 % × $51,000) ( Notes 2)	$5,100
Amount included with Simpson's itemized deductions	$3,140

Notes:

1. Reimbursements = Reimbursement for physician's charges + reimbursement for hospital costs

Reimbursements = $250 + $1,200

Reimbursements = $1,450

2.IRS allows Deduction value for medical expenses = 10% of AGI ( Adjusted gross income)