Question 1

Shirley pays FICA (employer's share) on the wages she pays her maid to clean and maintain Shirley's personal residence.The FICA payment is not deductible as an itemized deduction.

Accepted Answer

FICA payments made by an employer on wages paid to employees are not deductible as an itemized deduction by the employer.

Question 2

The election to itemize is appropriate when total itemized deductions are less than the standard deduction based on the taxpayer's filing status.

Accepted Answer

The election to itemize is appropriate when total itemized deductions are greater than the standard deduction based on the taxpayer's filing status.

Question 3

Fees for automobile inspections,automobile titles and registration,bridge and highway tolls,parking meter deposits,and postage are not deductible if incurred for personal reasons,but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

Accepted Answer

Fees for automobile inspections, titles and registration, tolls, parking meters, and postage are not generally deductible for personal expenses, but they can be deductible as business expenses for self-employed taxpayers. These expenses would be claimed as deductions for AGI.

Question 4

In 2015,Dena traveled 600 miles for specialized medical treatment that was not available in her hometown.She paid $90 for meals during the trip,$145 for a hotel room for one night,and $15 in parking fees.She did not keep records of other out-of-pocket costs for transportation.Dena can include $203 in computing her medical expenses.

Accepted Answer

Dena can include the hotel room ($145) and parking fees ($15) as medical expenses. For transportation, she can use the standard medical mileage rate for 2015, which was 23 cents per mile, totaling $138 (600 miles x $0.23). Meals are not deductible. Therefore, her total deductible medical expenses are $145 + $15 + $138 = $298. However, the question asks if she can include $203, which is less than $298, so she can indeed include $203.

Question 5

Mason,a physically handicapped individual,pays $10,000 this year for the installation of wheelchair ramps,support bars,and railings in his personal residence.These improvements increase the value of his personal residence by $2,000.Only $8,000 of the expenditure qualifies as a medical expense for tax purposes.

Accepted Answer

The amount spent on home improvements can only qualify as a medical expense if the improvement is medically necessary. Since the improvement in this scenario only increases the value of the residence and is not medically necessary, only the $8,000 spent on medically necessary improvements can be claimed as a medical expense for tax purposes.

Question 6

In 2016,Rhonda received an insurance reimbursement for medical expenses incurred in 2015.She is not required to include the reimbursement in gross income in 2016 if she claimed the standard deduction in 2015.

Accepted Answer

If Rhonda claimed the standard deduction in 2015, she is considered to have paid no medical expenses in excess of 10% of her adjusted gross income, and therefore the reimbursement is not taxable. However, if she itemized her deductions and deducted her medical expenses in 2015, the reimbursement would be included in her gross income in 2016 to the extent that the reimbursement exceeds the amount of the medical expenses that she actually paid in 2015.

Question 7

In 2015,Brandon,age 72,paid $3,000 for long-term care insurance premiums.He may include the $3,000 in computing his medical expense deduction for the year.

Accepted Answer

Long-term care insurance premiums can be included in the medical expense deduction, subject to certain limitations based on age and amount. In 2015, for taxpayers age 71 and older, the limit was $4,220 per person. Therefore, Brandon's $3,000 premium would be eligible for inclusion in his medical expense deduction for the year.

Question 8

A taxpayer may not deduct the cost of new curbing (relative to a personal residence),even if the construction is required by the city and the curbing provides an incidental benefit to the public welfare.

Accepted Answer

The cost of new curbing for a personal residence is considered a capital improvement and is not deductible as a current expense. This is true even if the construction is required by the city and provides an incidental public benefit.

Question 9

A physician recommends a private school for Ellen's dependent child.Because of the physician's recommendation,the cost of the private school will qualify as a medical expense deduction (subject to percentage limitations).

Accepted Answer

Education expenses, even if recommended by a physician, are generally not considered medical expenses and therefore cannot be deducted as such.

Question 10

Bill paid $2,500 of medical expenses for his daughter,Marie.Marie is married to John and they file a joint return.Bill can include the $2,500 of expenses when calculating his medical expense deduction.

Accepted Answer

According to IRS guidelines, taxpayers are allowed to include medical expenses paid for their dependents, including those who are married and file a joint return. Therefore, Bill can include the $2,500 of expenses when calculating his medical expense deduction.

Question 11

Jim's employer pays half of the premiums on a group medical insurance plan covering all employees,and employees pay the other half.Jim can exclude the half of the premium paid by his employer from his gross income and may include the half he pays in determining his medical expense deduction.

Accepted Answer

This statement is true. According to the IRS, if an employer contributes to an employee's medical insurance plan, the employee can exclude those contributions from their gross income. However, the employee can only include the portion of the premiums they paid when calculating their medical expense deduction.

Question 12

Personal expenditures that are deductible as itemized deductions include medical expenses,Federal income taxes,state income taxes,property taxes on a personal residence,mortgage interest,and charitable contributions.

Accepted Answer

Federal income taxes are not deductible as itemized deductions; however, state income taxes, property taxes on a personal residence, mortgage interest, and charitable contributions are deductible.

Question 13

Matt,a calendar year taxpayer,pays $11,000 in medical expenses in 2015.He expects $5,000 of these expenses to be reimbursed by an insurance company in 2016.In determining his medical expense deduction for 2015,Matt must reduce his 2015 medical expenses by the amount of the reimbursement he expects in 2016.

Accepted Answer

Matt should not reduce his 2015 medical expenses by the expected reimbursement. He can claim the full $11,000 as a deduction in 2015 and report the $5,000 reimbursement as income in 2016 when it is received.

Question 14

Georgia contributed $2,000 to a qualifying Health Savings Account in the current year.The entire amount qualifies as an expense deductible for AGI.

Accepted Answer

Contributions made to a qualifying Health Savings Account are deductible for AGI. Therefore, the entire $2,000 contributed by Georgia is deductible for AGI.

Question 15

Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence.The appraisal fee qualifies as a deductible medical expense.

Accepted Answer

The answer of Mindy paid an appraiser to determine how...

Question 16

Maria traveled to Rochester,Minnesota,with her son,who had surgery at the Mayo Clinic.Her son stayed at the clinic for the duration of his treatment.She paid airfare of $300 and $50 per night for lodging.The cost of Maria's airfare and lodging cannot be included in determining her medical expense deduction.

Accepted Answer

The answer of Maria traveled to Rochester,Minnesota,with her son,who had...

Question 17

Chad pays the medical expenses of his son,James.James would qualify as Chad's dependent except that he earns $7,500 during the year.Chad may claim James' medical expenses even if he is not a dependent.

Accepted Answer

According to IRS rules, a taxpayer may claim the medical expenses of a child who would qualify as a dependent but for the fact that the child has earnings exceeding the exemption amount. Therefore, Chad may claim James' medical expenses even though James is not his dependent.

Question 18

Adrienne sustained serious facial injuries in a motorcycle accident.To restore her physical appearance,Adrienne had cosmetic surgery.She cannot deduct the cost of this procedure as a medical expense.

Accepted Answer

Cosmetic surgery is generally not deductible as a medical expense unless it is medically necessary to correct a deformity arising from a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. In Adrienne's case, the cosmetic surgery was done for the purpose of restoring her physical appearance, which does not meet the criteria for a deductible medical expense.

Question 19

Upon the recommendation of a physician,Ed has a swimming pool installed at his residence because of a heart condition.If he is allowed to deduct all or part of the cost of the pool,Ed's increase in utility bills due to the operation of the pool qualifies as a medical expense.

Accepted Answer

According to IRS regulations, if a swimming pool is installed on the recommendation of a physician for medical reasons, then the cost of installation and operation can be considered a deductible medical expense. This includes any increases in utility bills due to the operation of the pool.

Question 20

Sergio was required by the city to pay $2,000 for the cost of new curbing installed by the city in front of his personal residence.The new curbing was installed throughout Sergio's neighborhood as part of a street upgrade project.Sergio may not deduct $2,000 as a tax,but he may add the $2,000 to the basis of his property.

Accepted Answer

According to IRS guidelines, costs for improving the curb appeal or aesthetics of a property can be added to the property's basis. Since the new curbing was installed by the city as part of a street upgrade project and not for Sergio's personal benefit, he cannot deduct the $2,000 as a tax. Therefore, he may add the $2,000 to the basis of his property.

Quiz 10: Deductions and Losses: Certain Itemized Deductions