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    Preparation of Schedule A For Medical Expenses

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    In 2008, Margaret and John Murphy are married taxpayers who file a joint tax return with AGI of $25,000. During the year they incurred the following expenses:

    Hospitalization Insurance Premiums $1,050
    Premiums on an insurance policy that pays 300
    $100 per day for each day Margaret is Hospitalized
    Medical care lodging (two people, one night) 65
    Hospital bills 2,200
    Doctor bills 850
    Dentist bills 175
    Prescription drugs and medicines 340
    Psychiatric care 300

    In addition, during March they drove 947 miles for medical transportation, and their insurance company reimbursed them $900 for the above expenses. On the following segment of Schedule A of Form 1040, calculate the Murphy's medical expense deduction.

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    Solution Preview

    IRC 213(a) states that "There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent (as defined in section 152, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof), to the extent that such expenses exceed 7.5 percent of adjusted gross income." Further, IRC 213(d)(2) provides that "Amounts paid for lodging (not lavish or extravagant under the circumstances) while away from home primarily for and essential to medical care [as defined in this section] shall be ...

    Solution Summary

    This solution presents both the Internal Revenue Code provision and a completed Schedule A for medical-related expenses.