Question 1

Maria traveled to Rochester,Minnesota,with her son,who was operated on 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

False

Question 2

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 not claim James' medical expenses because he is not a dependent.

Accepted Answer

Even if James earns income, he may still be claimed as a dependent if he meets the other requirements, such as being under a certain age and receiving financial support from Chad. Therefore, Chad may still potentially claim James' medical expenses as a deduction on his tax return.

Question 3

Georgia contributed $2,000 to a qualifying Health Savings Account in 2012.The entire amount qualifies as a medical expense and is potentially deductible as an itemized deduction.

Accepted Answer

Contributions to a Health Savings Account (HSA) are tax-deductible and are not reported as medical expenses on the tax return. Medical expenses that can be deducted as itemized deductions are limited to expenses that exceed 7.5% of the taxpayer's adjusted gross income (AGI). Therefore, Georgia cannot deduct the full $2,000 contribution to the HSA as an itemized deduction without any medical expenses that exceed 7.5% of AGI.

Question 4

Taxes assessed for local benefits,such as a new sidewalk,are not deductible as real property taxes.

Accepted Answer

Taxes assessed for local benefits, such as new sidewalks, are considered assessments and are not deductible as real property taxes. Only taxes that are levied for general public benefits, such as schools or roads, are deductible as real property taxes.

Question 5

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 6

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 7

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 rules, an individual can include the medical expenses paid for their dependents, even if the dependents are married and file a joint return. Therefore, Bill can include the $2,500 of expenses when calculating his medical expense deduction.

Question 8

In 2012,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 can be included in the medical expense deduction if the taxpayer is over a certain age (currently 65), and the amount of premium paid exceeds a certain limit (currently a range of $430-$5,430 depending on age). Since Brandon is 72 and paid $3,000 in premiums, he meets both criteria and can include it in his medical expense deduction.

Question 9

A medical expense does not have to relate to a particular ailment to be deductible.

Accepted Answer

According to IRS guidelines, a medical expense is deductible if it is for the prevention or alleviation of a physical or mental defect or illness, and it does not have to relate to a particular ailment. Examples include medical expenses for general health maintenance or cosmetic procedures due to a congenital disease or abnormality.

Question 10

In 2013,Rhonda received an insurance reimbursement for medical expenses incurred in 2012.She is not required to include the reimbursement in gross income in 2013 if she claimed the standard deduction in 2012.

Accepted Answer

This is true according to the IRS. If Rhonda claimed the standard deduction in 2012, she is not required to include the reimbursement in her gross income in 2013. However, if Rhonda itemized her deductions in 2012 and claimed a deduction for medical expenses, she may need to include the reimbursement in her gross income.

Question 11

In 2012,Dena traveled 545 miles for specialized medical treatment that was not available in her hometown.She paid $80 for meals during the trip,$125 for a hotel room on Tuesday night,and $15 in parking fees.She did not keep records of other out-of-pocket costs for transportation.Dena can include $270 in computing her medical expenses.

Accepted Answer

We are given that Dena traveled 545 miles for specialized medical treatment, but we do not know the total cost of transportation. In order for Dena to include $270 in computing her medical expenses, the total cost of transportation would have to be at least $400 ($270 + $80 for meals + $125 for hotel + $15 for parking). Without knowing the total cost of transportation, we cannot determine if Dena can include $270 in computing her medical expenses. Therefore, the answer is false.

Question 12

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

Question 13

Any personal expenditures not specifically allowed as itemized deductions by the tax law are nondeductible (unless they are deductible in arriving at AGI).

Accepted Answer

This statement is true. Nondeductible personal expenses are those that are not specifically allowed as itemized deductions by the tax law, such as clothing, groceries, and personal vacations. However, certain expenses that are deductible in arriving at AGI, such as certain investment expenses or certain self-employed business expenses, may be deductible even though they are not itemized deductions.

Question 14

George,a sculptor,has an elevator installed in his house to transport heavy materials to his loft studio because he is concerned that he might strain his back by lifting heavy objects.George may deduct the full cost of the elevator as a medical expense.

Accepted Answer

The cost of the elevator may be deductible as a home modification expense for medical reasons, but it cannot be deducted as a medical expense. Medical expenses are usually limited to expenses incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease or illness.

Question 15

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

Question 16

Margaret,who is self-employed,paid $6,000 for medical insurance coverage.She can include the $6,000 when calculating her medical expense deduction.

Accepted Answer

The answer of Margaret,who is self-employed,paid $6,000 for medical insurance...

Question 17

Gerald,a physically handicapped individual,pays $9,000 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 $7,000 of the expenditure qualifies as a medical deduction (subject to the 7.5% floor).

Accepted Answer

The cost of home improvements that increase the value of the property are not deductible as medical expenses. Therefore, only the $7,000 that qualifies as necessary medical expenses (such as the wheelchair ramps) can be deducted subject to the 7.5% floor.

Question 18

Matt,a calendar year taxpayer,pays $11,000 in medical expenses in 2012.He expects $5,000 of these expenses to be reimbursed by an insurance company in 2013.In determining his medical expense deduction for 2012,Matt must reduce his 2012 medical expenses by the amount of the reimbursement he expects in 2013.

Accepted Answer

The answer of Matt,a calendar year taxpayer,pays $11,000 in medical...

Question 19

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

FICA payments made by an employer (in this case, Shirley) are not deductible as an itemized deduction on the employer's tax return.

Question 20

Erica,Carol's daughter,has a mild form of autism.Dr.Malone recommends that Carol send Erica to a special school for autistic children when she enters first grade.Erica may include the cost of tuition,meals,and lodging for the special school when computing her medical expense deduction.

Accepted Answer

According to IRS Publication 502, expenses for the diagnosis, cure, mitigation, treatment, or prevention of disease, including autism, are deductible medical expenses. This includes the cost of special schools for children with a medical condition, such as autism. Therefore, Erica may include the cost of tuition, meals, and lodging for the special school when computing her medical expense deduction.

Quiz 10: Deductions and Losses: Certain Itemized Deductions