Fred and Lucy are married,ages 33 and 32,and together have AGI of $120,000 in 2015.They have four dependents and file a joint return.They pay $5,000 for a high deductible health insurance policy and contribute $2,600 to a qualified Health Savings Account.During the year,they paid the following amounts for medical care: $9,200 in doctor and dentist bills and hospital expenses,and $3,000 for prescribed medicine and drugs.In October 2015,they received an insurance reimbursement of $4,400 for the hospitalization.They expect to receive an additional reimbursement of $1,000 in January 2016.Determine the maximum itemized deduction allowable for medical expenses in 2015.
A)$800
B)$3,400
C)$9,200
D)$12,800
E)None of the above

Question

Quizplus · Accepted Answer

The deductible medical expenses are calculated as total medical expenses minus insurance reimbursements, minus 10% of AGI. Total expenses are $9,200 + $3,000 = $12,200. Reimbursements are $4,400. Net expenses are $12,200 - $4,400 = $7,800. 10% of AGI is $12,000. Deductible expenses are $7,800 - $12,000 = $0. Since the deductible cannot be negative, the maximum itemized deduction is $800, which is the amount exceeding the 10% AGI threshold.

Fred and Lucy Are Married,ages 33 and 32,and Together Have