Bill would like some tax benefits for his investment expenses incurred this year. His AGI is $190,000. Currently, his expenses consist of: (1) $1,000 investment advice fees, (2) $1,500 unreimbursed employee business expenses (a miscellaneous itemized deduction), and (3) $600 tax return preparation fees. How much more, if any, must Bill spend for investment expenses this year before he receives any tax benefit?

Question

Quizplus · Accepted Answer

In order for Bill to receive any tax benefit, his investment expenses must exceed 2% of his AGI, which is $3,800 ($190,000 × 2%). Currently, his expenses only total $3,100 ($1,000 + $1,500 + $600). Therefore, he must spend at least $700 more on investment expenses before he receives any tax benefit. Option C is the only choice that meets this requirement.

Bill Would Like Some Tax Benefits for His Investment Expenses