Question 1

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

According to the IRS, expenses for special education are deductible as medical expenses if the education is recommended by a doctor to help the taxpayer overcome a specific learning disability. Therefore, Erica may include the cost of tuition, meals, and lodging for the special school as a medical expense deduction.

Question 2

In 2011,Rhonda received an insurance reimbursement for medical expenses incurred in 2010.She is not required to include the reimbursement in gross income in 2011 if she claimed the standard deduction in 2010.

Accepted Answer

According to IRS Publication 17, if Rhonda claimed the standard deduction in 2010, she is not required to include the insurance reimbursement in her gross income for 2011. This is because she did not receive a tax benefit from the medical expenses deduction in 2010.

Question 3

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

False

Question 4

Ed paid $1,660 of medical expenses for his son Mark.Mark is married to Judy and they file a joint return.Ed cannot include the $1,660 when calculating his medical expense deduction.

Accepted Answer

The answer of Ed paid $1,660 of medical expenses for...

Question 5

Barbara,who is self-employed,paid $3,600 for medical insurance coverage.She can include 100% of the $3,600 when calculating her itemized medical expense deduction.

Accepted Answer

Self-employed individuals can deduct 100% of their health insurance premiums as an adjustment to income, not as an itemized medical expense deduction.

Question 6

Georgia contributed $2,000 to a qualifying Health Savings Account in 2010.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; they are tax-deductible contributions, not itemized deductions for medical expenses.

Question 7

The election to itemize is appropriate when the taxpayer's allowable itemized deductions exceed the allowable standard deduction.

Accepted Answer

This statement is true. Taxpayers may choose to itemize their deductions if the total amount of their allowable itemized deductions (such as medical expenses, state and local taxes, mortgage interest, charitable contributions, etc.) exceeds the standard deduction amount. Itemizing deductions can potentially result in a lower tax liability for the taxpayer.

Question 8

Ernie sold his personal residence to Amanda on July 1,2010.He had paid $3,900 in real property taxes on March 1,2010,the due date for property taxes for 2010.Ernie must reduce the amount realized for his property by the portion of the $3,900 allocable to Amanda.

Accepted Answer

Since Ernie sold his property to Amanda on July 1, 2010, Amanda is responsible for the property taxes from that point forward. Therefore, Ernie must reduce the amount realized for his property by the portion of the $3,900 in property taxes allocable to Amanda, as she will be responsible for paying those taxes for the rest of the year.

Question 9

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 are deductible as business expenses by a self-employed taxpayer. However, they are not deductible if incurred for personal reasons.

Question 10

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 not claim James' medical expenses because he is not a dependent.

Accepted Answer

Even if James earns income, he may still be claimed as a dependent if he meets the other requirements, such as being under a certain age and receiving financial support from Chad. Therefore, Chad may still potentially claim James' medical expenses as a deduction on his tax return.

Question 11

Bert resides in a nursing home primarily for medical reasons rather than personal reasons.Costs for meals and lodging can be included in determining his deductible medical expenses.

Accepted Answer

According to IRS Publication 502, "The cost of meals and lodging at a hospital or similar institution if a principal reason for being there is to receive medical care." Since Bert resides in a nursing home primarily for medical reasons, the costs for meals and lodging can be included in determining his deductible medical expenses.

Question 12

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 are not deductible as an itemized deduction.

Question 13

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

Accepted Answer

Taxes assessed for local benefits are not deductible as real property taxes according to the IRS. Deductible real property taxes generally include taxes that are based on the assessed value of the real property and are levied for the general public welfare.

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

The increase in utility bills due to the operation of the pool qualifies as a medical expense because the swimming pool was installed on the recommendation of a physician for the treatment of a medical condition.

Question 15

Medical expenses must relate to a particular ailment in order to be deductible.The cost of a periodic physical exam is not deductible because it relates to the taxpayer's general state of health.

Accepted Answer

The cost of a periodic physical exam can be deductible as a medical expense, even though it relates to the taxpayer's general state of health, if it is recommended by a physician to diagnose or treat a specific medical condition.

Question 16

Stewart,a calendar year taxpayer,pays $6,000 in medical expenses in 2010.Even if he expects $3,000 of these expenses to be reimbursed by an insurance company in 2011,Stewart can include all $6,000 of the expenses in determining his medical expense deduction for 2010.

Accepted Answer

Stewart can include all $6,000 of the expenses in his medical expense deduction for 2010, regardless of the expected reimbursement in 2011. The reimbursement will be accounted for in the tax year in which it is received.

Question 17

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 18

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 19

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 the IRS, travel expenses for medical care are deductible if the trip is primarily for, and essential to, receiving medical care. The cost of transportation, lodging (limited to $50 per night for each person), and reasonable food expenses can be included as part of medical expenses when calculating the medical expense deduction. As Walter traveled to obtain specialized outpatient medical care not available in his hometown and his sister accompanied him due to his illness, he may include the cost of their airfare and lodging (up to $50 per night for each) in determining his medical expense deduction.

Question 20

In 2010,Mary traveled 800 miles for specialized medical treatment that was not available in her hometown.She paid $60 for meals during the trip,$105 for a hotel room on Tuesday night,and $20 in parking fees.She did not keep records of other out-of-pocket costs for transportation.Mary can include $202 in computing her medical expenses.

Accepted Answer

Mary can include $202 in computing her medical expenses because the meals, hotel room, and parking fees are considered out-of-pocket expenses for transportation.

Quiz 10: Deductions and Losses: Certain Itemized Deductions