Question

Quinn, a single individual living alone, became physically handicapped due to a diving accident. To maintain an independent lifestyle, he incurred $30,000 in modifications to his personal residence. The modifications included widening halls and doorways for a wheelchair, installing support bars in the bathroom and kitchen, installing a stairway lift, and rewiring for improved accessibility. Quinn's neighbor, who works in real estate, charged Antonio $200 for an appraisal, valuing the residence at $129,000 before the improvements and $140,000 after. Additionally, due to the operation of the stairway lift, Antonio noticed a $680 increase in utility bills for the current year. Disregarding percentage limitations, how much of the above expenditures qualify as medical expense deductions?

A. $30,000

B. $200

C. $680

D. $30,880

Answer 1

Quinn can deduct $19,000 for home modifications, which is the total cost minus the increase in property value due to the modifications, $200 for the appraisal fee, and $680 for the increase in utility costs, totaling $19,880 in medical expense deductions.

Step-by-step explanation:

The question presented involves determining the amount qualified for medical expense deductions from a list of expenditures incurred by Quinn, a physically handicapped individual. According to the IRS, medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They can also include the costs for equipment, supplies, and home modifications related to medical care.

For home improvements to qualify as medical expense deductions, the cost must exceed the increase in the value of the property. Quinn's residence was appraised at a $11,000 increase in value ($140,000 post-improvements minus $129,000 pre-improvements). Therefore, of the $30,000 spent on the modifications, only the amount that exceeds the $11,000 increase in value is deductible. Thus, Quinn can deduct $19,000 ($30,000 in modifications minus $11,000 increase in property value).

Additionally, the $200 fee for the appraisal can be considered a medical expense because it is a necessary cost to determine the eligible amount of the medical deduction. Lastly, the $680 increase in utility costs due to the medical equipment (stairway lift) can also be considered a deductible medical expense. Therefore, Quinn can claim a total of $19,880 in medical expense deductions ($19,000 + $200 + $680).