Question

Simpson is a single individual who is employed full-time by Duff Corporation. This year Simpson reports AGI of $54,000 and has incurred the following medical expenses: Dentist charges Physician's charges Optical charges Cost of eyeglasses Hospital charges Prescription drugs Over-the-counter drugs Medical insurance premiums (not through an exchange) 1,120 $1,880 2,760 605 525 4,500 275 805

Answer 1

A. In order to get deduction , the expenses must satisfy the one of the following conditions

1. Transportation to or from medical care

2. Insurence for medical care

3. Expenses related to diagnosis,tratement or prevention of disease.

4. Treatement that effects ant structure or function of the body.

Here, All given expenses are eligible for deduction except Optical charges,Cost of eyeglases since these expenses are not satisfying any one of the above mentioned criteira.

Therefore total of the expenses except Optical charges,Cost of eyeglases are $11,340.

Amount eligible for deduction is total eligible expenses less 10 percent of AGI

Amount eligible for deduction = $11,340- 10%($54,000) = $ 5940

B). Incase of any expenses that are reimbursed by insurer or any other shall not be ekgible for itemized deduction. in the given case $ 740 of physician's charges and $1700 for hospital costs got reimbursed. so this amount should not consider. therefore amount of medical expenses that will be inckuded as itemised deduction is $5940-$2440=$3500