[Anonymous]

T Brown and S Brownare married and filed a joint return. Their medical expenditures included the following:

medical insurance premiums 1,000

medicines prescribed by doctors 600

over the counter cold drugs 200

doctor fees 700

transportation to and from doctors 800

ambulance 500

doctor fee related to an injury incurred by the Brown’s son, Dale. The Brown’s paid the bill; however, they provided no other support for Dala during the year. Dale earned $800 as a self-employed plumber. Assuming the Brown’s AGI was $ 40, 000, what amount of medical expense can the Brown’s deduct as an itemized deduction?

The answer is 0. Just for this question, can you use 7.5% floor?

My answer is different. I’d like to know what I am missing.. Can anyone help me?

Thank you!

[NYCaccountant]

The floor for 2013 is 10%. Looks like they're expenses are not in excess of 10% of AGI, so none of it can be itemized.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[NYCaccountant]

The floor for 2013 is 10%. Looks like they're expenses are not in excess of 10% of AGI, so none of it can be itemized.

FAR - 93
REG - 87
BEC - 84!!!!
AUD - 99!!!!!! CPA exam complete.

[Anonymous]

The amount qualified would be $3600.

If they include Dale's injury costs, then that would put them at $4400, which means $400 would be deductible after the 10% limit.

However, since Dale does not qualify as a dependent, they are under the 10% limit to deduct medical expenses; thus, answer = 0.

The couple may use the 7.5% limit if they are above the age of 65.

I think this is correct… someone pls confirm

[Anonymous]

The amount qualified would be $3600.

If they include Dale's injury costs, then that would put them at $4400, which means $400 would be deductible after the 10% limit.

However, since Dale does not qualify as a dependent, they are under the 10% limit to deduct medical expenses; thus, answer = 0.

The couple may use the 7.5% limit if they are above the age of 65.

I think this is correct… someone pls confirm

[Anonymous]

@dksmoove : Thanks for your reply. This question is from a couple of years ago. The answer was based on 7.5 % limit. ( I am aware that it's 10% now.) 7.5 % floor limitation would be 3,000. The total medical expense is 3,600. The itemized deduction portion should be 600. That was my answer. Then the answer is 0. The answer might be wrong?

[Anonymous]

@dksmoove : Thanks for your reply. This question is from a couple of years ago. The answer was based on 7.5 % limit. ( I am aware that it's 10% now.) 7.5 % floor limitation would be 3,000. The total medical expense is 3,600. The itemized deduction portion should be 600. That was my answer. Then the answer is 0. The answer might be wrong?

[runnerup]

Qualified medical is $2,900 (do not include the $700 for Dale's doctor fee).

7.5% of AGI is $3,000.

None of it is deductible.

REG 10/12/13 - 94
FAR 10/17/13 - 93
AUD 11/11/13 - 92
BEC 11/20/13 - 87
ethics 11/27/13 - 92%

[runnerup]

Qualified medical is $2,900 (do not include the $700 for Dale's doctor fee).

7.5% of AGI is $3,000.

None of it is deductible.

REG 10/12/13 - 94
FAR 10/17/13 - 93
AUD 11/11/13 - 92
BEC 11/20/13 - 87
ethics 11/27/13 - 92%

[TAXMAN710]

What you all are missing is the bit about self employment income. Since he has $800 of self employment income, he gets an above the line deduction for self employed health insurance of $800, which reduces the available medical expenses below the $3000 threshold provided by the 7.5% of 40k agi. This gives us the 0$ deductible portion for itemized deductions.

REG-July 12
BEC-May 12
FAR-July 12
AUD-October 12

[TAXMAN710]

What you all are missing is the bit about self employment income. Since he has $800 of self employment income, he gets an above the line deduction for self employed health insurance of $800, which reduces the available medical expenses below the $3000 threshold provided by the 7.5% of 40k agi. This gives us the 0$ deductible portion for itemized deductions.

REG-July 12
BEC-May 12
FAR-July 12
AUD-October 12

[Not a Quitter]

It doesn't say the son is a dependant…says he's self-employed. Is it becasue the parents can't claim his medical expenses?

FAR- 85 I'm DONE!
BEC- 75
REG- 60,60,75
AUD- 74,74,83

CPAExcel used for BEC, AUD, REG
Exam Matrix used for FAR plus NINJA Blitz, cpareviewforfree and a little CPAExcel

[Not a Quitter]

It doesn't say the son is a dependant…says he's self-employed. Is it becasue the parents can't claim his medical expenses?

FAR- 85 I'm DONE!
BEC- 75
REG- 60,60,75
AUD- 74,74,83

CPAExcel used for BEC, AUD, REG
Exam Matrix used for FAR plus NINJA Blitz, cpareviewforfree and a little CPAExcel

[Not a Quitter]

And also they don't have anything over the 7.5% floor (since this was years ago).

FAR- 85 I'm DONE!
BEC- 75
REG- 60,60,75
AUD- 74,74,83

CPAExcel used for BEC, AUD, REG
Exam Matrix used for FAR plus NINJA Blitz, cpareviewforfree and a little CPAExcel

[Not a Quitter]

And also they don't have anything over the 7.5% floor (since this was years ago).

FAR- 85 I'm DONE!
BEC- 75
REG- 60,60,75
AUD- 74,74,83

CPAExcel used for BEC, AUD, REG
Exam Matrix used for FAR plus NINJA Blitz, cpareviewforfree and a little CPAExcel

[Anonymous]

@ Thanks everyone for valuable inputs.

medical insurance premiums $1,000 -> itemized item ( If they are self-employed, it would be “ALD.” Assuming that this question is from itemized deduction chapter, it's highly likely that they are not self-employed.) I think the trick to this question is whether Dale is dependent or not. I thought he was dependent even though he had income. Hmm. I guess not. What others think?

[Author]

Replies