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 (employer's share) paid on wages for personal household employees is not deductible as an itemized deduction.

Question 2

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

False

Question 3

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 4

In 2011,Dena traveled 545 miles for specialized medical treatment that was not available in her hometown.She paid $80 for meals during the trip,$125 for a hotel room on Tuesday night,and $15 in parking fees.She did not keep records of other out-of-pocket costs for transportation.Dena can include $235 in computing her medical expenses.

Accepted Answer

Dena can include the cost of the hotel room ($125) and parking fees ($15) as medical expenses, totaling $140. Meals and unrecorded transportation costs are not deductible as medical expenses.

Question 5

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, automobile titles and registration, bridge and highway tolls, parking meter deposits, and postage can be deductible as business expenses for self-employed taxpayers, but not as personal expenses. Therefore, the statement is true.

Question 6

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

Accepted Answer

Carol can claim Chad's medical expenses even if he is not a dependent, as long as Chad would qualify as her dependent except for the income limitation.

Question 7

Erica,Carol's daughter,has a mild form of autism.Dr.Malone recommends that Carol send Erica to a special school for autistic children when she enters first grade.Erica may include the cost of tuition,meals,and lodging for the special school when computing her medical expense deduction.

Accepted Answer

The cost of tuition, meals, and lodging for a special school for children with autism can be included as medical expenses for tax deduction purposes.

Question 8

In 2011,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 are considered a medical expense and can be included when calculating the medical expense deduction. In order to claim the deduction, the total amount of medical expenses must exceed a certain percentage of the taxpayer's adjusted gross income (AGI). The percentage varies depending on the taxpayer's age and other factors.

Question 9

Any personal expenditures not specifically allowed as itemized deductions by the tax law are nondeductible (unless they are deductible in arriving at AGI).

Accepted Answer

Personal expenditures that are not specifically allowed as itemized deductions by the tax law are generally considered nondeductible, unless they are considered deductible in arriving at AGI. Examples of expenses that are not deductible include personal living expenses, clothing, education expenses not related to work, and commuting costs.

Question 10

Matt,a calendar year taxpayer,pays $9,000 in medical expenses in 2011.He expects $4,000 of these expenses to be reimbursed by an insurance company in 2012.In determining his medical expense deduction for 2011,Matt must reduce his 2011 medical expenses by the amount of the reimbursement he expects in 2012.

Accepted Answer

Matt should not reduce his 2011 medical expenses by the expected reimbursement. He can deduct the full amount of $9,000 in 2011 and report the reimbursement as income in 2012 when it is received.

Question 11

A medical expense does not have to relate to a particular ailment to be deductible.

Accepted Answer

This is true. The IRS allows for the deduction of medical expenses that are not necessarily related to a particular ailment, such as preventative care or general health improvements. However, the expenses must still be considered "qualified" and must exceed a certain percentage of the individual's income before they can be deducted.

Question 12

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

This is because the cost of the new curbing is considered a capital improvement to the property, which can be added to the basis of the property and potentially reduce capital gains taxes in the future. However, it is not a deductible expense for tax purposes.

Question 13

George,a sculptor,has an elevator installed in his house to transport heavy materials to his loft studio because he is concerned that he might strain his back by lifting heavy objects.George may deduct the full cost of the elevator as a medical expense.

Accepted Answer

The cost of the elevator may be deductible as a home modification expense for medical reasons, but it cannot be deducted as a medical expense. Medical expenses are usually limited to expenses incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease or illness.

Question 14

Walter traveled to another city to obtain specialized outpatient medical care not available in his hometown.His sister accompanied him because he was too ill to travel alone.He may include the cost of his airfare and lodging (up to $50 per night for himself and up to $50 per night for his sister)in determining his medical expense deduction.

Accepted Answer

According to IRS guidelines, the cost of transportation and lodging for medical care is deductible as a medical expense. In this case, Walter traveled to another city to obtain specialized medical care not available in his hometown and his sister accompanied him because he was too ill to travel alone. Therefore, he may include the cost of their airfare and lodging (up to $50 per night for each) in determining his medical expense deduction.

Question 15

In 2012,Rhonda received an insurance reimbursement for medical expenses incurred in 2011.She is not required to include the reimbursement in gross income in 2012 if she claimed the standard deduction in 2011.

Accepted Answer

If Rhonda claimed the standard deduction in 2011, she cannot also claim the medical expenses as an itemized deduction. Therefore, the reimbursement she received in 2012 for those expenses is not taxable income.

Question 16

Betty,who is an accounting firm partner,paid $4,800 for medical insurance coverage for herself.She can include the $4,800 when calculating her itemized medical expense deduction.

Accepted Answer

The answer of Betty,who is an accounting firm partner,paid $4,800...

Question 17

Georgia contributed $2,000 to a qualifying Health Savings Account in 2011.The entire amount qualifies as a medical expense and is potentially deductible as an itemized deduction.

Accepted Answer

Contributions to a Health Savings Account (HSA) are not considered medical expenses and are not deductible as itemized deductions; instead, they are typically deductible above-the-line, reducing adjusted gross income.

Question 18

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

The increase in utility bills due to the operation of the pool can be considered a medical expense if the pool was installed upon the recommendation of a physician for a medical condition.

Question 19

Taxes assessed for local benefits,such as a new sidewalk,are not deductible as real property taxes.

Accepted Answer

Taxes assessed for local benefits, such as a new sidewalk, are considered special assessments and are not deductible as real property taxes on federal income tax returns.

Question 20

Tom paid $1,880 of medical expenses for his son,Ted.Ted is married to Ann and they file a joint return.Tom cannot include the $1,880 of expenses when calculating his medical expense deduction.

Accepted Answer

The answer of Tom paid $1,880 of medical expenses for...

Quiz 10: Deductions and Losses: Certain Itemized Deductions