Question 1

In 2017,Rhonda received an insurance reimbursement for medical expenses incurred in 2016.She is not required to include the reimbursement in gross income in 2017 if she claimed the standard deduction in 2016.

Accepted Answer

This is true according to IRS Publication 502, which states that if you claimed the standard deduction in the year you incurred the medical expenses and later receive a reimbursement, you do not include the reimbursement in your gross income in the year you receive it.

Question 2

A physician recommends a private school for Ellen's dependent child.Because of the physician's recommendation,the cost of the private school will qualify as a medical expense deduction (subject to percentage limitations).

Accepted Answer

The cost of a private school is not considered a medical expense, even if recommended by a physician. Medical expenses include things like doctor's fees, hospital bills, and prescription medications.

Question 3

Bill paid $2,500 of medical expenses for his daughter,Marie.Marie is married to John and they file a joint return.Bill can include the $2,500 of expenses when calculating his medical expense deduction.

Accepted Answer

According to IRS guidelines, if Bill pays medical expenses for his dependent, such as his daughter Marie, he can include those expenses when calculating his medical expense deduction, even if Marie is married and files a joint return with her spouse.

Question 4

Georgia contributed $2,000 to a qualifying Health Savings Account in the current year.The entire amount qualifies as an expense deductible for AGI.

Accepted Answer

Contributions to a Health Savings Account are tax-deductible for AGI, up to certain limits. In 2021, the maximum contribution limit for an individual is $3,600, and the maximum contribution limit for a family is $7,200. Therefore, Georgia's contribution of $2,000 is within the allowable limit and qualifies as an expense deductible for AGI.

Question 5

A taxpayer may not deduct the cost of new curbing (relative to a personal residence),even if the construction is required by the city and the curbing provides an incidental benefit to the public welfare.

Accepted Answer

According to IRS guidelines, expenses that improve the value of a taxpayer's personal residence or are considered a normal maintenance cost cannot be deducted on the tax return. The fact that the curbing provides an incidental benefit to the public welfare does not change its nature as a personal expense.

Question 6

In 2016,Dena traveled 600 miles for specialized medical treatment that was not available in her hometown.She paid $90 for meals during the trip,$145 for a hotel room for one night,and $15 in parking fees.She did not keep records of other out-of-pocket costs for transportation.Dena can include $179 in computing her medical expenses.

Accepted Answer

Dena can include $179 in computing her medical expenses because the meals, hotel room, and parking fees are considered out-of-pocket expenses for medical care.

Question 7

Upon the recommendation of a physician,Ed has a swimming pool installed at his residence because of a heart condition.If he is allowed to deduct all or part of the cost of the pool,Ed's increase in utility bills due to the operation of the pool qualifies as a medical expense.

Accepted Answer

The increase in utility bills due to the operation of the pool qualifies as a medical expense if Ed is allowed to deduct all or part of the cost of the pool, as recommended by a physician for his heart condition.

Question 8

Sergio was required by the city to pay $2,000 for the cost of new curbing installed by the city in front of his personal residence.The new curbing was installed throughout Sergio's neighborhood as part of a street upgrade project.Sergio may not deduct $2,000 as a tax,but he may add the $2,000 to the basis of his property.

Accepted Answer

According to IRS guidelines, the cost of new curbing installed by the city is considered an improvement to the property and can be added to the basis of the property. It cannot be deducted as a tax.

Question 9

The election to itemize is appropriate when total itemized deductions are less than the standard deduction based on the taxpayer's filing status.

Accepted Answer

The election to itemize is appropriate when total itemized deductions are greater than the standard deduction based on the taxpayer's filing status.

Question 10

Shirley pays FICA (employer's share)on the wages she pays her maid to clean and maintain Shirley's personal residence.The FICA payment is not deductible as an itemized deduction.

Accepted Answer

Employer's share of FICA on wages paid to household employees is not deductible as an itemized deduction.

Question 11

Matt,a calendar year taxpayer,pays $11,000 in medical expenses in 2016.He expects $5,000 of these expenses to be reimbursed by an insurance company in 2017.In determining his medical expense deduction for 2016,Matt must reduce his 2016 medical expenses by the amount of the reimbursement he expects in 2017.

Accepted Answer

For the year 2016, Matt can deduct the full $11,000 in medical expenses. Expected reimbursements are not considered until they are actually received.

Question 12

Personal expenditures that are deductible as itemized deductions include medical expenses,Federal income taxes,state income taxes,property taxes on a personal residence,mortgage interest,and charitable contributions.

Accepted Answer

Federal income taxes are not deductible as itemized deductions; however, state income taxes, property taxes on a personal residence, mortgage interest, and charitable contributions are deductible.

Question 13

Adrienne sustained serious facial injuries in a motorcycle accident.To restore her physical appearance,Adrienne had cosmetic surgery.She cannot deduct the cost of this procedure as a medical expense.

Accepted Answer

Cosmetic surgery is generally not deductible as a medical expense unless it is medically necessary to correct a deformity arising from a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. In Adrienne's case, the cosmetic surgery was done for the purpose of restoring her physical appearance, which does not meet the criteria for a deductible medical expense.

Question 14

Chad pays the medical expenses of his son,James.James would qualify as Chad's dependent except that he earns $7,500 during the year.Chad may claim James' medical expenses even if he is not a dependent.

Accepted Answer

As per the IRS rules, a taxpayer can claim the medical expenses of a person as long as the taxpayer provides more than half of that person's annual support, even if that person is not a dependent. In this case, Chad pays for James' medical expenses and thus can claim them on his tax return even though James earns money and does not qualify as a dependent.

Question 15

In 2016,Brandon,age 72,paid $3,000 for long-term care insurance premiums.He may include the $3,000 in computing his medical expense deduction for the year.

Accepted Answer

Long-term care insurance premiums are considered a qualifying medical expense and can be included in calculating the medical expense deduction, subject to certain limitations. As long as Brandon meets the criteria for deducting medical expenses, he can include the $3,000 paid for long-term care insurance premiums in his deduction calculation.

Question 16

Jim's employer pays half of the premiums on a group medical insurance plan covering all employees,and employees pay the other half.Jim can exclude the half of the premium paid by his employer from his gross income and may include the half he pays in determining his medical expense deduction.

Accepted Answer

This statement is true. According to the IRS, premiums paid by the employer for group medical insurance can be excluded from an employee's gross income. The employee can only include the portion of the premium paid by themselves when calculating their medical expense deduction.

Question 17

Mason,a physically handicapped individual,pays $10,000 this year for the installation of wheelchair ramps,support bars,and railings in his personal residence.These improvements increase the value of his personal residence by $2,000.Only $8,000 of the expenditure qualifies as a medical expense for tax purposes.

Accepted Answer

The $8,000 expenditure can be considered a medical expense for tax purposes since it is related to the installation of necessary medical equipment in the home. The $2,000 increase in home value cannot be deducted as a medical expense.

Question 18

Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence.The appraisal fee qualifies as a deductible medical expense.

Accepted Answer

The answer of Mindy paid an appraiser to determine how...

Question 19

Maria traveled to Rochester,Minnesota,with her son,who had surgery at the Mayo Clinic.Her son stayed at the clinic for the duration of his treatment.She paid airfare of $300 and $50 per night for lodging.The cost of Maria's airfare and lodging cannot be included in determining her medical expense deduction.

Accepted Answer

The answer of Maria traveled to Rochester,Minnesota,with her son,who had...

Question 20

Fees for automobile inspections,automobile titles and registration,bridge and highway tolls,parking meter deposits,and postage are not deductible if incurred for personal reasons,but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

Accepted Answer

Fees for automobile inspections, titles and registration, bridge and highway tolls, parking meter deposits, and postage are not deductible if incurred for personal reasons, but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

Quiz 10: Deduction and Losses Certain Itemized Deductions