Question

Tomika and Mark had $3,800 in medical expenses and paid an additional $8,009 for medical insurance. The insurance covered 60% of the medical expenses. The IRS allows medical and dental expense deductions for the amount that exceeds 7.5% of a taxpayer's adjusted gross income. If their adjusted gross income is $101,598, how much can they claim as a medical deduction?

Answer 1

$1909.15

Explanation:

You want to know the allowed medical deduction if the taxpayer had adjusted gross income of $101,598, paid $8,009 for medical insurance, and had expenses of $3,800, of which 60% were paid by insurance.

Out-of-pocket

The total out-of-pocket medical expense includes the $8009 cost of insurance and the portion of medical expenses not covered:

(1 -0.60)·$3800 = $1520

Then the out-of-pocket medical costs were ...

$8009 +1520 = $9529

Threshold

The expense threshold is 7.5% of the adjusted gross income, so is ...

$101,598 · 0.075 = $7619.85

Deductible amount

The deductible amount is the amount by which expenses exceed the threshold:

$9529 -7619.85 = $1909.15

They can claim $1909.15 as a medical deduction.

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Additional comment

Likely the amount that goes on the tax form is $1909, as rounding to the nearest dollar is preferred.

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