During this year, T, who is under 65, paid the following expenses: Medical $5,00
ID: 2656485 • Letter: D
Question
During this year, T, who is under 65, paid the following expenses:
Medical $5,000
City assessment for repaving the street
where T's residence is located 800
Qualified residence interest 3,600
State income tax 2,000
T's adjusted gross income is $40,000
T's medical deduction would be:
$5,000
$2,000
$1,000
Zero
None of the above
The amount of the city assessment included in the itemized deductions is.
It depends
$800
Zero
d. None of the above
T's total itemized deductions based on the above information are:
$11,400
$4,600
$7,600
$6,600
a.$5,000
b.$2,000
c.$1,000
d.Zero
e.None of the above
Explanation / Answer
Solution.
(i) T has incurred medical expenses = 5000
Deduction on account of medical expenses would be in excess of 7.5% of adjusted gross total income
Gross total income =40,000
Deduction =5000- 40000*7.5%=2000
T's medical deduction would be 2000, option B is correct
(ii) The amount of the city assessment included in the itemized deductions is:
option D is correct as deduction for interest and state income tax are allowed
(iii) T's total itemized deductions are :
Medical deduction = 2000
City assessment deduction:
Residence interest= 3600
State income tax = 2000
Total deduction= ( 2000+3600+2000)= 7600
Option C is correct i.e. 7600
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