Richard, age 50, is employed as an actuary.For calendar year 2018, he had AGI of $130,000 and paid the following medical expenses: Derrick and Jane would qualify as Richard's dependents except that they file a joint return.Richard's medical insurance policy does not cover them.Richard filed a claim for $4,800 of his own expenses with his insurance company in November 2018 and received the reimbursement in January 2019.What is Richard's maximum allowable medical expense deduction for 2018?

Question

Richard, age 50, is employed as an actuary.For calendar year 2018, he had AGI of $130,000 and paid the following medical expenses:   Derrick and Jane would qualify as Richard's dependents except that they file a joint return.Richard's medical insurance policy does not cover them.Richard filed a claim for $4,800 of his own expenses with his insurance company in November 2018 and received the reimbursement in January 2019.What is Richard's maximum allowable medical expense deduction for 2018?

Quizplus · Accepted Answer

To calculate the maximum allowable medical expense deduction for 2018, we first need to calculate Richard's adjusted gross income (AGI) threshold. This is calculated as 7.5% of Richard's AGI, which is ($130,000 x 0.075) = $9,750.

Next, we need to calculate Richard's total medical expenses for 2018. This is the sum of the expenses he paid for himself and the expenses he paid for his dependents. Since Derrick and Jane do not qualify as Richard's dependents, their expenses cannot be included in this calculation. Therefore, Richard's total medical expenses for 2018 are ($3,200 + $1,940) = $5,140.

Finally, we need to determine Richard's maximum allowable medical expense deduction for 2018. This is calculated as the amount by which Richard's total medical expenses exceed his AGI threshold. Therefore, Richard's maximum allowable medical expense deduction for 2018 is ($5,140 - $9,750) = -$4,610. However, the maximum allowable medical expense deduction cannot be negative, so the actual deduction is $0.

Therefore, the best choice is C, $10,340.

Richard, Age 50, Is Employed as an Actuary