25 May Twilight has medical staff in residence. Disregarding the AGI f
Question
1. Fred and Lucy are married, ages 33 and 32, and together have AGI of $120,000 in 2014. They have four dependents and file a joint return. They pay $5,000 for a high deductible health insurance policy and contribute $2,600 to a qualified Health Savings Account. During the year, they paid the following amounts for medical care: $9,200 in doctor and dentist bills and hospital expenses, and $3,000 for prescribed medicine and drugs. In October 2014, they received an insurance reimbursement of $4,400 for the hospitalization. They expect to receive an additional reimbursement of $1,000 in January 2015. Determine the maximum itemized deduction allowable for medical expenses in 2014.
a. $800.
b. $3,400.
c. $9,200.
d. $12,800.
e. None of the above.
2. Richard, age 50, is employed as an actuary. For calendar year 2014, he had AGI of $130,000 and paid the following medical expenses:
| Medical insurance premiums | $5,300 |
| Doctor and dentist bills for Derrick and Jane (Richard’s parents) | 7,900 |
| Doctor and dentist bills for Richard | 5,100 |
| Prescribed medicines for Richard | 830 |
| Nonprescribed insulin for Richard | 960 |
Derrick and Jane would qualify as Richard’s dependents except that they file a joint return. Richard’s medical insurance policy does not cover them. Richard filed a claim for $4,800 of his own expenses with his insurance company in November 2014 and received the reimbursement in January 2015. What is Richard’s maximum allowable medical expense deduction for 2014?
a. $0.
b. $7,090.
c. $13,000.
d. $20,090.
e. None of the above.
3. Sandra is single and does a lot of business entertaining at home. Because Arthur, Sandra’s 80year old dependent grandfather who lived with Sandra, needs medical and nursing care, he moved to Twilight Nursing Home. During the year, Sandra made the following payments on behalf of Arthur:
| Room at Twilight | $4,500 |
| Meals for Arthur at Twilight | 850 |
| Doctor and nurse fees | 700 |
| Cable TV service for Arthur’s room | 107 |
| Total | $6,157 |
Twilight has medical staff in residence. Disregarding the AGI floor, how much, if any, of these expenses qualify for a medical deduction by Sandra?
a. $6,157.
b. $6,050.
c. $5,200.
d. $1,550.
e. None of the above.
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