Medical expense deduction?

Question

Roger is employed as an actuary. For calendar year 2012, he had an AGI of $130,000 and paid the following medical expenses:

Medical insurance premiums $5,300
Doctor and dentist bills for Derrick and Jane (Roger's parents) 7,900
Doctor and dentist bills for Roger 5,100
Prescribed medicines for Roger 830
Nonprescribed insulin for Roger 960

Derrick and Jane would qualify as Roger's dependents escept that they file a joint return. Roger's medical insurance policy does not cover them. Roger filed a claim for $4,800 of his own expenses with his insurance company in November 2012 and received the reimbursement in Jan 2013. What is Roger's maximum allowable medical expense deduction for 2012?

Answer 1

$2440

Answer 2

20,090 - (130,000 x .075) 9,750 = 10,340. The expenses for his parents and insulin are included based on the following quotes from publication 502. The reimbursement was not received until 2013 so the expenses are deductible, which would make the reimbursement taxable in 2013 under the tax benefit doctrine. You can find a discussion about the reimbursement on page 20 of pub 502 as well.



"You can include medical expenses you paid for an individual that would have been your dependent except that:



1. He or she received gross income of $3,800 or more in 2012,

2. He or she filed a joint return for 2012, or

3. You, or your spouse if filing jointly, could be claimed as a dependent on someone else's 2012 return." Top of page 4 publication 502.



"Medicines

You can include in medical expenses amounts you pay for prescribed medicines and drugs. A prescribed drug is one that requires a prescription by a doctor for its use by an individual. You can also include amounts you pay for insulin. Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed." Page 12 pub 502.

Answer 3

Only if you itemize deductions can you deduct clinical costs. Did you include revenue tax or state and local tax payments (best can use one)? That would be the little further you ought to go ahead and itemize.

Answer 4

the 7900 cannot be used. So he can deduct the portion of HIS expenses above 7.5% of his AGI (9750).



Since he was reimbursed for $4800 of his costs, then he can deduct nothing at all, he only has about $12,200 in costs, so -4800 is only 7390, and that's below the 7.5% threshhold. No deductible medical expenses for the Rog-man.