Isabella pays $500 each month in after tax dollars for health insurance premiums. She is not self-employed. During the current year, she also incurred $200 in doctor bills and $50 in over-the-counter medications. Her AGI is $45,000. What amount will she be able to deduct as an itemized deduction after the AGI floor is applied?

Question

Social Studies

Jaylon Williams

24 May, 00:28

Isabella pays $500 each month in after tax dollars for health insurance premiums. She is not self-employed. During the current year, she also incurred $200 in doctor bills and $50 in over-the-counter medications. Her AGI is $45,000. What amount will she be able to deduct as an itemized deduction after the AGI floor is applied?

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Ashleigh Villegas · Answer 1

monthly health tax = $500

Total for the year = $500 * 12 = $6000

Doctor bills = $200

AGI = $45,000

Note: Taxpayers under the age of 65 are not able to deduct medical expenses until they exceed 10% Adjusted Gross Income (AGI), which is calculated as the difference between the Total Gross Income and some deductibles.

Isabella is 50, and can only deduct medical expenses when they exceed 10% of AGI.

TOTAL medical expenses = $6000 + $200 = $6200

10% of AGI = 45,000 * 0.1 = $4500

Therefore, Health expenses is more than 10% AGI.

Therefore, itemized deduction;

$6200 - $4500 = $1700