Question 1

On the recommendation of a physician, Ed has a swimming pool installed at his residence because of a heart condition.If he is allowed to deduct all or part of the cost of the pool, Ed's increase in utility bills due to the operation of the pool qualifies as a medical expense.

Accepted Answer

This is true according to IRS regulations. The increase in utility bills due to the operation of a medically necessary pool qualifies as a medical expense and can be deducted as such. However, the amount that can be deducted depends on various factors, and it is recommended to consult a tax professional for guidance.

Question 2

A taxpayer may not deduct the cost of new curbing (relative to a personal residence) even if the construction is required by the city and the curbing provides an incidental benefit to the public welfare.

Accepted Answer

The cost of new curbing for a personal residence is considered a capital expense that is not deductible for tax purposes, regardless of whether it is required by the city and provides an incidental benefit to the public welfare.

Question 3

Mason, a physically handicapped individual, pays $10,000 this year for the installation of wheelchair ramps, support bars, and railings in his personal residence.These improvements increase the value of his personal residence by
$2,000.Only $8,000 of the expenditure qualifies as a medical expense for tax purposes.

Accepted Answer

The $2,000 increase in value does not affect the medical expense deduction. Only the $8,000 that qualifies as a medical expense can be deducted.

Question 4

Maria traveled to Rochester, MN with her son who had surgery at the Mayo Clinic.He stayed at the clinic for the duration of his treatment.She paid airfare of $300 and $50 per night for lodging.The cost of Maria's airfare and lodging cannot be included in determining her medical expense deduction.

Accepted Answer

The IRS allows taxpayers to include travel expenses for medical care, such as airfare and lodging, as part of their medical expense deduction if the travel is primarily for, and essential to, receiving medical care.

Question 5

Personal expenditures that are deductible as itemized deductions include medical expenses, Federal income taxes, state income taxes, property taxes on a personal residence, mortgage interest, and charitable contributions.

Accepted Answer

Federal income taxes are not deductible as itemized deductions; however, state income taxes, property taxes on a personal residence, mortgage interest, and charitable contributions are deductible.

Question 6

A physician recommends a private school for Ellen's dependent child.Because of the physician's recommendation, the cost of the private school will qualify as a medical expense deduction (subject to percentage limitations).

Accepted Answer

The cost of tuition for private school is not considered a deductible medical expense, even if recommended by a physician, unless the education is specifically for and necessary to the medical care of the individual (e.g., a school for children with special educational needs due to medical conditions).

Question 7

Chad pays the medical expenses of his son, James.James would qualify as Chad's dependent except that he earns
$7,500 during the year.Chad may claim James' medical expenses even if he is not a dependent.

Accepted Answer

According to IRS rules, a taxpayer can claim medical expenses for a non-dependent child if the taxpayer provides over half of the child's support for the year. James' earning of $7,500 does not disqualify Chad from claiming his medical expenses, as Chad is still providing more than half of James' support.

Question 8

Shirley pays FICA (employer's share) on the wages she pays her housekeeper to clean and maintain Shirley's personal residence.The FICA payment is not deductible as an itemized deduction.

Accepted Answer

FICA (employer's share) payments on household employees are not deductible as an itemized deduction on the individual's tax return.

Question 9

In 2019, Rhonda received an insurance reimbursement for medical expenses incurred in 2018.She is not required to include the reimbursement in gross income in 2019 if she claimed the standard deduction in 2018.

Accepted Answer

According to IRS Publication 525, if Rhonda claimed the standard deduction in 2018, she can exclude the insurance reimbursement from her gross income in 2019.

Question 10

Matt, a calendar year taxpayer, pays $11,000 in medical expenses in 2019.He expects $5,000 of these expenses to be reimbursed by an insurance company in 2020.In determining his medical expense deduction for 2019, Matt must reduce his 2019 medical expenses by the amount of the reimbursement he expects in 2020.

Accepted Answer

In determining his medical expense deduction for 2019, Matt should not reduce his 2019 medical expenses by the expected reimbursement in 2020. He should calculate his deduction based on the actual expenses incurred in 2019, without regard to the expected reimbursement.

Question 11

Jim's employer pays half of the premiums on a group medical insurance plan covering all employees, and employees pay the other half.Jim can exclude the half of the premium paid by his employer from his gross income and may include the half he pays in determining his medical expense deduction.

Accepted Answer

This statement is true according to IRS regulations. Jim can exclude the portion paid by his employer and deduct the portion he pays as a medical expense deduction.

Question 12

This year Dena traveled 600 miles for specialized medical treatment that was not available in her hometown.She paid $90 for meals during the trip, $145 for a hotel room for one night, and $15 in parking fees.She did not keep records of other out-of-pocket costs for transportation.Dena can include $180 in computing her medical expenses.

Accepted Answer

Dena can include $180 in computing her medical expenses because the IRS allows a deduction for transportation costs to and from medical treatment, including meals and lodging.

Question 13

Fees for automobile inspections, automobile titles and registration, bridge and highway tolls, parking meter deposits, and postage are not deductible if incurred for personal reasons, but they are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer.

Accepted Answer

Fees for automobile inspections, automobile titles and registration, bridge and highway tolls, parking meter deposits, and postage are deductible as deductions for AGI if incurred as a business expense by a self-employed taxpayer. However, they are not deductible if incurred for personal reasons.

Question 14

Adrienne sustained serious facial injuries in a motorcycle accident.To restore her physical appearance, Adrienne had cosmetic surgery.She cannot deduct the cost of this procedure as a medical expense.

Accepted Answer

Cosmetic surgery is generally not deductible as a medical expense unless it is medically necessary to correct a deformity arising from a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. In Adrienne's case, the cosmetic surgery was done for the purpose of restoring her physical appearance, which does not meet the criteria for a deductible medical expense.

Question 15

The election to itemize is appropriate when total itemized deductions are less than the standard deduction based on the taxpayer's filing status.

Accepted Answer

The election to itemize is appropriate when total itemized deductions are greater than the standard deduction based on the taxpayer's filing status.

Question 16

Sergio was required by the city to pay $2,000 for the cost of new curbing installed by the city in front of his personal residence.The new curbing was installed throughout Sergio's neighborhood as part of a street upgrade project.Sergio may not deduct $2,000 as a tax, but he may add the $2,000 to the basis of his property.

Accepted Answer

According to IRS regulations, the cost of improvements that add value to a property, such as new curbing, can be added to the property's basis but cannot be deducted as a tax expense.

Question 17

Georgia contributed $2,000 to a qualifying Health Savings Account in the current year.The entire amount qualifies as an expense deductible for AGI.

Accepted Answer

Contributions made to a qualifying Health Savings Account are deductible for AGI, up to certain limits set by the IRS. In this case, the entire $2,000 contribution is deductible for AGI.

Question 18

Mindy paid an appraiser to determine how much a capital improvement made for medical reasons increased the value of her personal residence.The appraisal fee qualifies as a deductible medical expense.

Accepted Answer

The appraisal fee itself is not a deductible medical expense, as it is considered a cost of determining property value, not a direct medical expense.

Question 19

In 2019, Brandon, age 72, paid $5,000 for long-term care insurance premiums.He may include the $5,000 in computing his medical expense deduction for the year.

Accepted Answer

Long-term care insurance premiums are considered a qualified medical expense and can be included in the medical expense deduction, subject to certain limitations. In 2019, the medical expense deduction can be claimed for expenses that exceed 10% of the taxpayer's adjusted gross income (AGI), or 7.5% of AGI for taxpayers age 65 and older. Since Brandon is 72 years old, he may deduct the $5,000 long-term care insurance premiums if his total medical expenses exceed 7.5% of his AGI.

Question 20

Bill paid $2,500 of medical expenses for his daughter, Marie.She is married to John and they file a joint return.Bill
can include the $2,500 of expenses when calculating his medical expense deduction.

Accepted Answer

According to the IRS, a taxpayer can include medical expenses paid for their spouse or dependent, regardless of whether they file a joint return or not. Since Marie is a dependent of Bill, he can include the $2,500 of medical expenses when calculating his medical expense deduction.

Quiz 10: Deductions and Losses: Certain Itemized Deductions