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 $50,000 and has incurred the following medical expenses: Dentist charges Physician charges Optical charges Cost of eyeglasses Hospital charges Prescription drugs Over-the-counter drugs Medical insurance premiums (not through an exchange) $ 900 1,800 500 300 2,100 250 450 775 b. Suppose that Simpson was reimbursed for $250 of the physician's charges and $1,200 for the hospital costs. Calculate the amount of medical expenses that will be included with Simpson's itemized deductions after any applicable limitations. Medical expenses X This is a numeric cell, so

Answer 1

Ans:

In 2020, IRS allowed the tax payers to deduct the total qualified unreimbursed medical care expenses for the year that exceeds 10% of AGI.

Total qualified Unreimbursed Medical Care expenses:

Dentist Charges		$900
Physicians Charges	$1800
Less: Reimbursement	($250)	$1550
Opticians Charges		$500
Cost of eyeglasses		$300
Hospital Charges	$2100
Less: Reimbursement	($1200)	$900
Prescription drugs		$250
Over the counter drugs		$450
Medical insurance premium(not through an exchange)		$775
Total Qualified Unreimbursed Medical Care expenses		$5625

NOTE: Medical expenses include health and dental insurance premiums, doctor and hospital visits, co-pays, prescription and over-the-counter drugs, glasses and contacts, crutches, and wheelchairs and the list is not exhaustive.

Simpson's AGI	$50000
10% of AGI	$5000
Total Qualified Unreimbursed Medical Care expenses	$5625
Medical Care expenses that will be included with Simpsons itemized deductions (Total qualified expenses - 10% of AGI) i.e., ($5625-$5000)	$625

Medical expenses

$625