Question

In each of the following independent cases, indicate the amount (1) deductible for AGI, (2) deductible from AGI, and (3) deductible neither for nor from AGI before considering income limitations or the standard deduction. (Leave no answer blank. Enter zero if applicable.)

a. Fran spent $178 for uniforms for use on her job. Her employer reimbursed her for $105 of this amount under an accountable plan (and did not report the reimbursement as wages.
b. Tyler paid $154 for minor repairs to the fence at a rental house he owned.
Deductible for AGI $
Deductible from AGI $
Not deductible $
c. Timmy paid $775 for health insurance premiums this year. Timmy is employed full-time and his employer paid the remaining premiums as a qualified fringe benefit.
Deductible for AGI $
Deductible from AGI $
Not deductible $

Answer 1

a. Classification: $0 will be deductible for AGI and $73 from AGI

Justification: The accountable plan only reimburse deductible expenses. $73 from AGI miscellaneous itemized deduction is known as un-reimbursed employee business expenses. Income & expenses associated with $105 reimbursement offset each other

b. Classification: Repairs made to the house are deductible for AGI.

Justification: The amount paid for repairs is considered as miscellaneous itemized deduction. This repairs expense is incurred for earning the income. The house that repair is done on generates income in the form of rent.

c. Classification: Health insurance premium are deductible from AGI.

Justification: Amount paid for health insurance premium is not an expense incurred for earning the income rather it is a qualified application of earned income for which deduction from AGI is provided.