Calculating Medical and Dental Expenses: A Guide for Taxpayers

School: Trident Technical College - Course: ACCOUNTING 124 - Subject: Accounting

Part 1 - Scenario 1 - Federal Review the following scenario. Use the information provided to answer questions about the taxpayer's 2021 return. Review the following scenario. Use the information provided to answer questions about the taxpayer's 2021 return. Melanie Bolar (62) will use the single filing status. Her adjusted gross income during the year was $35,000. This is the amount she entered on her Form 1040, line 11. She would like to itemize deductions when she files her 2021 federal Form 1040 if it will result in a more favorable tax outcome. To seek relief from a medical condition during the year, Melanie traveled to a clinic in another state. She incurred the following trip-related expenses: $90 for a room in a hotel near the clinic (one night). $85 for non-hospital meals while she was away from home. Mileage. Melanie drove her own vehicle, and the round-trip distance was 500 miles. Melanie is not eligible for employer-sponsored health insurance. In addition to the travel expenses, Melanie incurred the following non-trip related, out-of-pocket medical expenses: $2,200 net out-of-pocket for health insurance premiums (paid with after-tax dollars). $1,300 for prescriptions. $350 in co-pays to her doctor. $300 for new glasses. $600 for basic dental services, including x-rays and exams. Question 1 of 151. Melanie's partially completed Schedule A,Itemized Deductions, is shown below. What amount should she enter for the total of her medical and dental expenses? $2,680 $2,805 $4,880 $5,005 Question 2 of 151. Melanie's partially completed Schedule A,Itemized Deductions, is shown below. Given the adjusted gross income limitation, what amount can she deduct for eligible medical and dental expenses? $0 $2,255 $2,380 $2,625

Chris (45) and Allison (46) Castillo are married, and they will file a joint return. During the year, they earned $82,500 in wages. They also had investment income consisting of: $200 interest income from a savings account with their local bank, reported on Form 1099-INT. $350 interest income from a certificate of deposit held with another local bank, reported on Form 1099-INT. $250 interest income from a U.S. Treasury note, reported on Form 1099-INT. $500 tax-exempt interest income from a municipal bond investment, reported on Form 1099-INT. $1,700 in ordinary dividends from a mutual fund investment, reported on Form 1099-DIV. They had no other income. Question 3 of 151. What amount will Chris and Allison report for taxable interest on their Form 1040? The couple's partially completed Form 1040, page 1, is shown below. You may use the form to assist you in answering this question. $550 $800 $1,050 $1,300 Question 4 of 151. What amount will Chris and Allison report for their total income on Form 1040? You may refer to the couple's partially completed Form 1040, page 1, which is shown below, to assist you in answering this question $83,050 $85,000 $85,250 $85,500 Jake (28) and Nicole (27) Graham are married and filing a joint return. Jake was employed full-time during the year. Nicole worked part-time, and she was also a full-time student at State University. During the year, she paid $3,800 in tuition and fees, substantiated with Form 1098-T. She did not have any other qualified expenses and did not receive any scholarships during the year. Nicole meets all the requirements to qualify for the American Opportunity Tax Credit. The couple's adjusted gross income is $47,000. The amount of tax reported on line 16 and on line 18 of their Form 1040 is $2,233. They had no additional taxes.