Question 1

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 $2,000 increase in value does not affect the medical expense deduction. Only the $8,000 that qualifies as a medical expense can be deducted.

Question 2

In 2018, Rhonda received an insurance reimbursement for medical expenses incurred in 2017. She is not required to include the reimbursement in gross income in 2018 if she claimed the standard deduction in 2017.

Accepted Answer

According to IRS Publication 502, if a taxpayer claimed the standard deduction in the year they incurred medical expenses and later receives an insurance reimbursement for those expenses, the reimbursement is not included in their gross income for the year they received it.

Question 3

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 to a Health Savings Account are typically tax-deductible up to certain limits, and can be deducted for AGI. Therefore, it is true that Georgia's entire contribution of $2,000 qualifies as an expense deductible for AGI.

Question 4

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

The cost of tuition for private school is not considered a deductible medical expense, even if recommended by a physician, unless the education is specifically for and necessary to the medical care of the individual (e.g., a school for children with special educational needs due to medical conditions).

Question 5

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

The fact that James earns $7,500 during the year does not disqualify him as a dependent for medical expense deduction purposes. However, even if James is not a dependent, Chad may still be able to claim James' medical expenses on his own tax return if he provided more than half of James' support during the year.

Question 6

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 7

In 2017, 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 $167 in computing her medical expenses.

Accepted Answer

Dena can include $167 in computing her medical expenses because the meals, hotel, and parking fees are considered transportation-related expenses.

Question 8

In 2017, 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 if the policy is qualified, and the policy holder is over 65 years old. In this case, Brandon is over 65 years old, and as such, can include the $3,000 he paid for long-term care insurance premiums in computing his medical expense deduction for the year.

Question 9

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

Question 10

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

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

Question 11

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 nondeductible personal expense, even if it is required by the city and provides an incidental benefit to the public welfare.

Question 12

Matt, a calendar year taxpayer, pays $11,000 in medical expenses in 2017. He expects $5,000 of these expenses to be reimbursed by an insurance company in 2018. In determining his medical expense deduction for 2017, Matt must reduce his 2017 medical expenses by the amount of the reimbursement he expects in 2018.

Accepted Answer

Matt should not reduce his 2017 medical expenses by the expected reimbursement. Instead, he should claim the full amount of medical expenses in 2017 and include any reimbursement received in 2018 as income, if it was deducted in the previous year.

Question 13

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 14

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

If Ed is allowed to deduct all or part of the cost of the pool as a medical expense, then the increase in his utility bills due to the operation of the pool also qualifies as a medical expense under IRS guidelines.

Question 15

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...

Question 16

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 rules, a taxpayer can include medical expenses paid for their dependent, even if the dependent is married and files a joint return with their spouse. Therefore, Bill can include the $2,500 of medical expenses for his daughter when calculating his medical expense deduction.

Question 17

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 is correct as per IRS rules. Employees can exclude the portion of the premiums paid by their employer from their gross income and may include the portion they pay in determining their medical expense deduction.

Question 18

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 regulations, payments made for improvement of property, such as new curbing, can be added to the property's basis, but are not deductible as a tax.

Question 19

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

Accepted Answer

FICA (employer's share) payments on household employees are not deductible as an itemized deduction on the individual's tax return.

Question 20

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...

Quiz 10: Deductions and Losses: Certain Itemized Deductions