During 2017, Suey, who is 66, had the following transactions: Salary $82,000 Ban

Question

During 2017, Suey, who is 66, had the following transactions:

Salary $82,000 Bank loan (proceeds used to buy personal auto) 12,000 Alimony paid 13,000 Child support paid 6,000 Charitable contribution 7,000 IRA contribution 7,000 Gift from aunt 22,000 Home mortgage interest paid 6,000 Interest on City of Atlanta bonds 2,000 Medical expenses 8,800

How much can Suey deduct in medical expenses: a. $4,113. b. $4,000. c. $2,700. d. $8,800. e. none of the above. Please give a 2-3 sentence explanation to why.

Explanation / Answer

Medical expenses are deductible that are in excess of 7.5% of AGI.

AGI = 82000 (salary) - 13000 (alimony) - 6500 (Max IRA deduction) = 62500

7.5% of AGI = 4687.5

Medical expenses deduction = 8800-4687.5 = 4112.5 = 4113

Option a. 4113 is correct

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