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.

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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.

Matt,a Calendar Year Taxpayer,pays $9,000 in Medical Expenses in 2011