Dotty Sprauge incurred the following medical expenses this year. $\begin{array}{llr}
\text { Payments to physicians and dentists} &\$4,300\
\text { Eayment for two-day stay at Mercy Hospital } &\$6,250\
\text {Payments to physical therapist } &\$2,100\
\text {Prescription drugs } &\$1,010
\end{array}$
Dotty's insurance company reimbursed her for $8,800 of these expenses. If Dotty's AGI is $26,550, compute her medical expense deduction.

Question

Dotty Sprauge incurred the following medical expenses this year. $\begin{array}{llr}
  \text {  Payments to physicians and dentists} &\$4,300\
 \text { Eayment for two-day stay at Mercy Hospital } &\$6,250\
 \text {Payments to physical therapist  } &\$2,100\
 \text {Prescription drugs  } &\$1,010
\end{array}$
 Dotty's insurance company reimbursed her for $8,800 of these expenses. If Dotty's AGI is $26,550, compute her medical expense deduction.

Quizplus · Accepted Answer

To calculate the medical expense deduction, we must first find out Dotty's total unreimbursed medical expenses, which is $12,200 ($8,800 reimbursed from the total $21,000). Next, we must find out Dotty's deduction threshold, which is 7.5% of her AGI. Multiplying 7.5% by Dotty's AGI of $26,550 gives us a threshold of $1,991. Since Dotty's total unreimbursed medical expenses ($12,200) exceed the threshold ($1,991), we can subtract the threshold from the total expenses to get the medical expense deduction, which is $10,209. However, the medical expense deduction is subject to further limitations and phaseouts, so it's important to consult with a tax professional for guidance.

Dotty Sprauge Incurred the Following Medical Expenses This Year Dotty's Insurance Company Reimbursed Her for $8,800 of These Expenses