12 Instructions : Choose the best multiple choice answer and explain why you cho
ID: 2791888 • Letter: 1
Question
12 Instructions : Choose the best multiple choice answer and explain why you chose the answer. MUST provide 2-3 sentence brief explanation and show all work. All sources must be noted.
____ 12. Sank and Mollie are married, 44 years old and together have AGI of $110,000 in 2016. They have three dependents and file a joint return. They pay $6,000 for a high deductible health insurance policy and contribute $3,700 to a qualified Health Savings Account. During the year, they paid the following amounts for medical care: $8,800 in doctor bills and hospital expenses, and $2,000 for prescribed medicine. In September 2016, they received an insurance reimbursement of $5,300 for the hospitalization. They expect to receive an additional reimbursement of $1,000 in January 2017. Determine the maximum deduction allowable for medical expenses in 2016.
a.
$2,800.
b.
$700.
c.
$2,750.
d.
$1,200.
e.
None of the above.
a.
$2,800.
b.
$700.
c.
$2,750.
d.
$1,200.
e.
None of the above.
Explanation / Answer
IRS allows you to deduct qualified medical expenses that exceeds 10% of AGI.
Qualified medical expenses includes contribution to high deductible health insurance policy ,qualified Health Savings Account and expense relating to purchase of prescribe medecines but does not include medical expenses which one can reimburse
Thus maximum deduction allowable for medical expenses = (6000+3700+2000) - (110000*10%)
=11700-11000
=700$
Ans b) $700
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