Which of the following are below the line income tax deductions? 1. Medical expe

Question

Which of the following are below the line income tax deductions?
1. Medical expenses.
2. Alimony paid.
3. Moving expenses.
4. Tax preparation fees.

Andrea and Elliott are married and together they have AGI of $80,000. They have no dependents and they file a joint federal income tax return. Each pays $4,800 for medical insurance. During the year, they paid the following amounts for medical care, for which they were not reimbursed by insurance:

Doctor and dentist bills and hospital expenses = $3,600

Prescription drugs = $800

Determine the deduction allowable for medical expenses paid during that year.

1 and 3

Explanation / Answer

Answer 1

1 and 4

Explanation : Below the line income tax deductions refer to those deductions which are deducted from the AGI. Thus for the amount of below the line income tax deductions we first need to compute th AGI.

Answer 2

The deduction allowable for medical expenses paid during that year is $6,000

Explanation :

Doctor and dentist bills and hospital expenses $3,600 Prescription drugs $800 Medical insurance ($4,800 * 2) $9,600 Total Medical Expenses $14,000 Less : 10 % of AGI ($80,000 * 10 %) ($8,000) Deduction allowable for medical expenses $6,000

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