Kathy is a single taxpayer. She had the following unreimbursed medical expenses for 2020: $5,000 of medical expenses related to an auto accident. She expects the other driver's auto insurance to reimburse her $3,000 of the expenses in early 2021.$1,000 prepayment to an orthodontist for braces she will receive in early 2021. The orthodontist has a strict policy that a prepayment is required before braces are given to a patient.$600 of her portion of health insurance premiums not covered by her employer.Due to being permanently handicapped after the accident, she had to install a wheelchair ramp and support bars in her home. Total costs were $4,000. The value of her home increased $2,000, and the improvements have a useful life of 15 years.Assuming she itemizes and her AGI was $40,000, what is her medical expense deduction for 2020?Assuming she does not itemize in 2021 and, as expected, received the reimbursement of $3,000 for the other driver's insurance company, how much AGI will she recognize in 2021 from the reimbursement?$4,600 deduction for 2020; $3,000 increase in AGI for 2021$7,600 deduction for 2020; $3,000 increase in AGI for 2021$1,600 deduction for 2020; $0 increase in AGI for 2021$2,600 deduction for 2020; $0 increase in AGI for 2021

Taxpayer is a person who pays the tax.Tax is beneficial for development of a country.

Answered: Kathy is a single taxpayer. She had the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Kathy is a single taxpayer. She had the following unreimbursed medical expenses for 2020:

$5,000 of medical expenses related to an auto accident. She expects the other driver's auto insurance to reimburse her $3,000 of the expenses in early 2021.
$1,000 prepayment to an orthodontist for braces she will receive in early 2021. The orthodontist has a strict policy that a prepayment is required before braces are given to a patient.
$600 of her portion of health insurance premiums not covered by her employer.
Due to being permanently handicapped after the accident, she had to install a wheelchair ramp and support bars in her home. Total costs were $4,000. The value of her home increased $2,000, and the improvements have a useful life of 15 years.

Assuming she itemizes and her AGI was $40,000, what is her medical expense deduction for 2020?

Assuming she does not itemize in 2021 and, as expected, received the reimbursement of $3,000 for the other driver's insurance company, how much AGI will she recognize in 2021 from the reimbursement?

$4,600 deduction for 2020; $3,000 increase in AGI for 2021
$7,600 deduction for 2020; $3,000 increase in AGI for 2021
$1,600 deduction for 2020; $0 increase in AGI for 2021
$2,600 deduction for 2020; $0 increase in AGI for 2021

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