Question

Emily is itemizing deductions on her federal income tax return and had $5200

in medical expenses last year. If her AGI was $43,000, and if medical
expenses are deductible to the extent that they exceed 7.5% of a taxpayer's
AGI, how much can Emily deduct for medical expenses?

Answer 1

Emily can deduct the $1,975 in medical expenses from her adjusted gross income.

Explanation:

Before an individual could deduct medical expenses as long as they exceeded 7.5% of their adjusted gross income (currently it's 10%).

If Emily's AGI = $43,000, then she will be able to deduct medical expenses that exceed $3,225 (= $43,000 x 7.5%).

Emily's medical expense deductions = $5,200 - $3,225 = $1,975.

If this situation happened this year, Emily would have only been able to deduct $900 [= $5,200 - ($43,000 x 10%)]

Answer 2

Emily can deduct $1975 for medical expenses.

Explanation:

Emily is itemizing deductions on her federal income tax return and had $5200. Her AGI was $43,000.

We have:

The AGI is =$43,000

Medical expenses amount = $5200

If medical expenses are deductible to the extent that they exceed 7.5% or 0.075 of a taxpayer’s AGI, means = 43,000 * 0.075 = $3225

Now the deductible amount is = $5200 - $3225 = $ 1975

Hence,Emily can deduct $1975 for medical expenses.