Question 1

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

The cost of new curbing related to a personal residence is considered a capital improvement and is generally not deductible as a current expense. The fact that it provides an incidental benefit to the public welfare does not change this rule.

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 tuition for private school is not considered a deductible medical expense, even if recommended by a physician, unless the education is specifically for and necessary to the medical care of the individual (e.g., a school for children with special educational needs due to medical conditions).

Question 3

In 2014, 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 on Tuesday night, and $15 in parking fees. She did not keep records of other out-of-pocket costs for transportation. Dena can include $206 in computing her medical expenses.

Accepted Answer

Dena can include the cost of transportation to and from the medical treatment location, as well as parking fees, in calculating her medical expenses. The amount of these expenses is not specified, but it is included in the total of $206 that she can claim as medical expenses.

Question 4

Matt, a calendar year taxpayer, pays $11,000 in medical expenses in 2014. He expects $5,000 of these expenses to be reimbursed by an insurance company in 2015. In determining his medical expense deduction for 2014, Matt must reduce his 2014 medical expenses by the amount of the reimbursement he expects in 2015.

Accepted Answer

Unlike the casualty loss deduction,the medical expense deduction does not have to be reduced by anticipated recoveries.Matt can include all $11,000 as a medical expense in 2014.

Question 5

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 6

Georgia contributed $2,000 to a qualifying Health Savings Account in 2014. The entire amount qualifies as an expense deductible for AGI.

Accepted Answer

Contributions to a Health Savings Account (HSA) are typically tax-deductible up to certain limits set by the IRS. In 2014, the maximum contribution limit for an individual with self-only coverage was $3,300 and $6,550 for a family. As Georgia contributed $2,000 to the HSA, the entire amount qualifies as an expense deductible for AGI.

Question 7

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

The employer's share of FICA is considered a business expense and is not deductible as an itemized deduction on Shirley's personal tax return.

Question 8

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 is considered a medical expense since the pool was installed upon the recommendation of a physician for a heart condition.

Question 9

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

According to IRS rules, Chad may claim James' medical expenses on his tax return, even if James is not considered his dependent for other tax purposes. This is because the medical expenses paid by Chad are considered to be his own expenses, regardless of whether the person receiving the medical care is a dependent or not.

Question 10

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

Bill can include the medical expenses he paid for his daughter, even though she is married and files a joint return with her spouse.

Question 11

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 12

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 13

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 is correct according to IRS rules. Jim can exclude the half of the premium paid by his employer from his gross income, but he may include the half he pays in determining his medical expense deduction.

Question 14

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 15

In 2014, 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 medical expense and can be included in the medical expense deduction, subject to certain limitations. As long as the total amount of eligible medical expenses exceeds a certain threshold (10% of adjusted gross income for most taxpayers, or 7.5% for those 65 or older), the taxpayer can deduct the portion that exceeds the threshold.

Question 16

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, automobile titles and registration, bridge and highway tolls, parking meter deposits, and postage are deductible as business expenses for a self-employed taxpayer, but not for personal reasons.

Question 17

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 rules, the cost of curbing installed by the city is considered a special assessment and cannot be deducted as a tax. However, Sergio may add the cost of the new curbing to the basis of his property, which can reduce his capital gains tax liability when he sells the property in the future.

Question 18

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...

Question 19

In 2015, Rhonda received an insurance reimbursement for medical expenses incurred in 2014. She is not required to include the reimbursement in gross income in 2015 if she claimed the standard deduction in 2014.

Accepted Answer

This statement is true. If Rhonda claimed the standard deduction in 2014, then any insurance reimbursement she received for medical expenses incurred in that year is considered to be tax-free in 2015. This is because the medical expenses were not claimed as an itemized deduction in 2014, so the reimbursement is not considered to be a recovery of previously deducted expenses. However, if Rhonda itemized deductions in 2014 and claimed a deduction for medical expenses, then any insurance reimbursement she received would be considered taxable income in 2015.

Question 20

Mason, age 70, a physically handicapped individual, pays $10,000 in 2014 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 deduction (subject to the AGI floor).

Accepted Answer

The full $10,000 is included as a medical expense under a special rule applicable to physically handicapped persons.The deduction is subject to the 7.5% floor in 2014.The 7.5% floor applies (rather than the 10% floor)because Mason is over 65 years of age.

Quiz 10: Deductions and Losses: Certain Itemized Deductions