Medical Expense Deduction and State Income Tax Deduction
Not what you're looking for?
Question 1:
Medical Expense Deduction and Reimbursement (LO. 2)
Hunter and Cynthia are married and together have AGI of $100,000 in 2012. They have three dependents and file a joint return. They pay $3,000 for a high-deductible health insurance policy and contribute $2,400 to a qualified Health Savings Account. During the year, they paid the following amounts for medical care: $6,900 in physician and dentist bills and hospital expenses and $2,300 for prescribed medicine and drugs. In November 2012, they received an insurance reimbursement of $2,500 for the physician and hospital expenses. They expect to receive an additional reimbursement of $1,500 in January 2013.
What amount (if any) is deductible for AGI?
The maximum deduction from AGI as an itemized deduction for medical expenses in 2012 is ____$ .
Question 2
State Income Tax Deduction and Refund (LO. 4)
Norma, who uses the cash method of accounting, lives in a state that imposes an income tax. In April 2012, she files her state income tax return for 2011 and pays an additional $1,000 in state income taxes. During 2012, her withholdings for state income tax purposes amount to $7,400, and she pays estimated state income tax of $700. In April 2013, she files her state income tax return for 2012, claiming a refund of $1,800. Norma receives the refund in August 2013.
If an amount is zero, enter "0".
a. Assuming that Norma itemized deductions in 2012, how much may she claim as a deduction for state income taxes on her Federal return for calendar year 2012 (filed April 2013)?
B. Assuming that Norma itemized deductions in 2012, how will the refund of $1,800 that she received in 2013 be treated for Federal income tax purposes?
Norma will have income or a loss of $____
C. Assume that Norma itemized deductions in 2012 and that she elects to have the $1,800 refund applied toward her 2013 state income tax liability. How will the $1,800 be treated for Federal income tax purposes?
Norma will have an income or a loss of $____.
d. Assuming that Norma did not itemize deductions in 2012, how will the refund of $1,800 received in 2013 be treated for Federal income tax purposes?
the amount of $____ will be included as income or a loss in 2013.
Purchase this Solution
Solution Summary
This solution illustrates which expenses are allowable as medical expense and state income tax deductions and the effect of those transactions on adjusted gross income.
Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance
These questions will test you on your knowledge of finance.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce