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16 November, 09:05

Richard, age 50, is employed as an actuary. For calendar year 2019, he had AGI of $130,000 and paid the following medical expenses:

Medical insurance premiums $5,300

Doctor and dentist bills for Derrick and Jane (Richard's parents) 7,900

Doctor and dentist bills for Richard 5,100

Prescribed medicines for Richard 830

Nonprescribed insulin for Richard 960

Derrick and Jane would qualify as Richard's dependents except that they file a joint return. Richard's medical insurance policy does not cover them. Richard filed a claim for $4,800 of his own expenses with his insurance company in November 2019 and received the reimbursement in January 2020. What is Richard's maximum allowable medical expense deduction for 2018?

a. $0

b. $7,090

c. $10,340

d. $20,090

e. None of the above

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Answers (1)
  1. 16 November, 09:11
    0
    c. $10,340

    Explanation:

    For year 2018, the deduction for medical expense is amount of qualified medical expense that exceeds 7.5% of AGI.

    Expenditure Richard can deduct as medical expense = $5300 + $7900 + $5100 + $830 + $960 - 7.5% * $130000

    = $10,340

    As such option c is correct and other options a, b, d and e are incorrect.
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