P, a single taxpayer, had $12,000 of deductible medical expenses in 2012.His 2011 A.G.I.was $24,000.His insurer reimbursed P for $11,000 of the expenses in 2013, and did not reimburse P for any expenses during 2012.If P deducted all of his allowable medical expenses on his 2012 return, how much of the reimbursement must be included in gross income for 2013 (P's itemized deductions for 2012 exceeded his standard deduction by $15,000.)

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Quizplus · Accepted Answer

P's allowable medical expenses for 2012 were $12,000, which he claimed on his tax return. The insurance reimbursement of $11,000 in 2013 means that P received a tax benefit for $1,000 of medical expenses that he did not actually pay out of his own pocket. Therefore, he must include $1,000 of the reimbursement in gross income on his 2013 tax return.

Note that P's itemized deductions for 2012 exceeding his standard deduction is irrelevant to this calculation.

P, a Single Taxpayer, Had $12,000 of Deductible Medical Expenses