Ivan's AGI is about $50,000 this year,and his typical medical expenses average about $4,000 per year.He will be in the 25% tax bracket.Ivan plans to partially retire next year at age 60 so he expects about a $15,000 reduction in AGI and his marginal tax rate to drop.Ivan will have about $1,000 of non-emergency dental work done in the next few months.Ivan should get the dental work done this year so he can enjoy tax savings at the higher tax rate.

Question

Quizplus · Accepted Answer

Ivan will not get over the 10% of AGI floor this year so none of the costs of the dental work will reduce his taxable income.Next year his AGI will be low enough that the dental costs will lower his taxable income,resulting in tax savings.

Ivan's AGI Is About $50,000 This Year,and His Typical Medical