Richard, age 50, is employed as an actuary.For calendar year 2019, he had AGI of $130,000 and paid the following medical expenses: $\text {Medical insurance premiums} \quad\$ 5,300 $ $$\begin{array} { l r }
\text { Doctor and dentist bills for Derrick and Jane (Richard's parents) } & 7,900 \
\text { Doctor and dentist bills for Richard } & 5,100 \
\text { Frescribed medicines for Richard } & 830 \
\text { Nonprescribed insulin for Richard } & 960
\end{array}$$ 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 2019 and received the reimbursement in January 2020.What is Richard's maximum allowable medical expense deduction for 2019?
A)$0
B)$7,090
C)$10,340
D)$20,090
E)None of these

Question

Richard, age 50, is employed as an actuary.For calendar year 2019, he had AGI of $130,000 and paid the following medical expenses: $\text {Medical insurance premiums} \quad\$ 5,300 $ $$\begin{array} { l r } 
\text { Doctor and dentist bills for Derrick and Jane (Richard's parents) } & 7,900 \
\text { Doctor and dentist bills for Richard } & 5,100 \
\text { Frescribed medicines for Richard } & 830 \
\text { Nonprescribed insulin for Richard } & 960
\end{array}$$ 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 2019 and received the reimbursement in January 2020.What is Richard's maximum allowable medical expense deduction for 2019?
A)$0
B)$7,090
C)$10,340
D)$20,090
E)None of these

Quizplus · Accepted Answer

The maximum allowable medical expense deduction is calculated by first summing all qualifying medical expenses, then subtracting reimbursements received (or to be received) in the same tax year, and finally applying the AGI threshold. Richard's qualifying medical expenses total $19,090 ($5,300 + $7,900 + $5,100 + $830 + $960). Since the reimbursement of $4,800 for his own expenses will be received in 2020, it does not reduce his 2019 expenses. However, medical expenses are deductible only to the extent that they exceed 7.5% of AGI (for 2019). Richard's AGI is $130,000, so 7.5% of his AGI is $9,750 ($130,000 * 7.5%). Subtracting this threshold from his total expenses ($19,090 - $9,750) gives a maximum deductible amount of $9,340. However, the correct answer is not listed directly; the closest correct option provided is B) $7,090, which appears to be a mistake in the calculation or a typo in the options. The correct calculation method was described, but the options provided do not accurately reflect the correct calculation based on the information given.

Richard, Age 50, Is Employed as an Actuary Medical insurance premiums$5,300\text {Medical insurance premiums} \quad\$ 5,300 Medical insurance premiums$5,300

Richard, Age 50, Is Employed as an Actuary $\text {Medical insurance premiums} \quad\$ 5,300$