[Anonymous]

I’m getting really frustrated here guys. Becker has quite a few mistakes in their MCQ’s that contradict answers for Individual AMT.

Are MEDICAL EXPENSES > 10% an ADJUSTMENT (add back) “panic tiMe” or not??

One answer says only MISCELLANEOUS ITEMIZED DEDUCTIONS > 2%.

And the other answer says BOTH MEDICAL EXPENSES and MISCELLANEOUS ITEMIZED DEDUCTIONS > 2% are add backs.

Thanks for any help.

Goodluck.

[jenpen]

Yes, both are add backs.

Maybe print out Form 6251 and work off of that. I find that easier when I'm answering questions. It helps me remember the information.

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[jenpen]

I found this explanation for the pneumonic, which seems to be “Panic Timme”

AMT Adjustment (Individual):

+Passive loss
Accelerated depreciation
NOL
Installment sale income from dealer
Contracts – % vs. complete
+Tax deductions
+Interest deductions on home equity loans – (add back not for home portion)
+Med deductions (10% not 7.5%)
+Misc. deductions (add back 2%)
+Exemptions (personal) and standard deduction

I hope this helps!

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[Madhav]

Think of AMT as a way for Govt. to squeeze little more money from you. Hence if you got deductions on items, you need to add back. Some of items you need to add back are those you deduct earlier like Standard Deductions, Medical Expenses(add the deduction for 7.5% but do not touch 10%), Miscellaneous expense, Passive activities and others. I think it is easy to get lost into detail but if you than AMT as a way to increase your taxable income by govt. so that they can charge you more tax since you made lot of money.

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[TommyTheCat]

medical expenses in general are deductible once a 10% AGI haircut is cleared, for both regular and AMT tax purposes. For regular tax, if the taxpayer is 65 of older the AGI haircut is reduced to 7.5%, as a way in my opinion to give seniors more potential to deduct medical costs (think of AARP being a big political lobbyist in washington, they got a tax break for seniors for this lobbying).

AMT does not respect this 65 year old plus phase-out reduction % amount, and reverts back to the 10% AGI clip. So the AMT add-back for medical expenses may be zero (if the taxpayer was under 65 for regular tax purposes), OR may be a 2.5% of AGI add-back (to go from the regular tax haircut of 7.5% back up to the AMT haircut of 10%).

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[LCros]

Hello All,

I was wondering if Becker gave an update to let you know that: Effective January 1, 2017, that the 7.5% expired for taxpayers over 65. Therefore the adjustment is 10% for people over and under 65. So, there is no longer an adjustment for medical for AMT. This would be testable for us since changes have 6 month grace period.

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[Anonymous]

Wow, thanks EVERYONE for all of the feedback!! That was quick and very informative!

I will refer to form 6251 like @Jeniffer suggested.

Thanks again everyone and Goodluck!!

[Anonymous]

Hi,

I want to second what @LCros said here, there is no longer an adjustment for individual AMT for medical expenses as the floor is now 10% for all ages on Schedule A in 2017.

The mnemonic SIMPL works well for individual AMT adjustment items:

S (Standard deduction)
I (Interest on home equity loans not for residence)
M (Miscellaneous itemized deductions)
P (Personal and dependency exemptions)
L (Local/state/property/sales/foreign taxes)

PIE works well for individual AMT Preference Items:

P (Private Activity Bonds)
I (Incentive Stock options)
E (Excess depreciation, depletion, intangible drilling costs)

[joonpark1212]

So if the the adjustment is 10% for people over and under 65. No need to worry about medical exp add back for AMT in 2017 Q4 exams???? I wasn't able to get a clear answer for this.

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[Anonymous]

@joonpark1212 ,

My impression from the Gleim course material is that we won't be tested on an AMT adjustment for medical expense deductions in Q4 2017. It sounds like Becker isn't completely updated yet. I haven't delved too deeply into the NINJA MCQ so I'm not sure about that material.

@Jeff, care to chime in on this?

[Heena93]

Can someone pls help me!

Was studying individual taxation through becker.

As per them, the medical expenses are taken as Itemized deduction to the extent they do not exceed 10% AGI and same is with ATM and hence, no adjustment is required for ATM.

However, by going through NINJA threads and other websites including IRS. It says that medical expenses are taken as an Itemized deduction to the extent they do not exceed 7.5% of AGI and hence adjustment is required for 2.5%.

Can you pls tell me which version is correct?

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[kikefuentez]

Hi @Heena1234,

If you have the opportunity to compare the Form 6251 (AMT) and Schedule A (Itemized Deductions) from 2016 and 2017, this changed as the percentage is no longer 10% and now is 7.5% for everyone. Because this changed, this is no longer an adjustment for AMT purposes. Maybe the information you are referring is not updated. The PANIC TIME that Becker use is the same, but without the medical expenses.

At least try to think that as an item less to memorize from the AMT adjustments. Doing some MCQ of Becker for the “itemized Deductions” I noticed that they are not updated. They are still using the 10% to answer their questions. They need to change that because that is no longer valid since 2017.

Summary: “Medical Expenses Deductions” allow is 7.5% (NOT 10%) and because of this change, the medical expenses deductions are no longer included in the AMT adjustments (because there is no difference on what AMT allows and what Schedule A allows).

Good luck! 🙂

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