REG · Federal Taxation of Individuals · 9 practice questions
Medical Expense Deductions: What Counts on Schedule A?
Only qualified, unreimbursed medical expenses above 7.5% of AGI are deductible on Schedule A. Use the checklist below to separate medical care from personal spending, remove pretax amounts, and apply special limits before practicing.
Try one first
Hint
First decide which payments qualify as medical expenses, then apply the AGI-based floor.
Answer A. Qualified medical expenses include the doctor bills ($5,000), prescription medicines ($1,200), and after-tax health insurance premiums ($2,400), totaling $8,600. Teeth-whitening performed solely for cosmetic reasons ($900) is not a deductible medical expense. The deduction equals qualified expenses minus 7.5% of AGI (0.075 × $80,000 = $6,000), so $8,600 − $6,000 = $2,600.
Why not B: This comes from incorrectly treating the $900 teeth‑whitening as a deductible expense: $8,600 + $900 = $9,500, then subtracting the $6,000 AGI floor to get $3,500. Because the whitening was purely cosmetic, it does not qualify.
Why not C: This equals the 7.5% of AGI floor itself. The floor is the threshold that qualified expenses must exceed, the deductible amount is qualified expenses minus the floor, not the floor amount.
Why not D: This equals the total qualifying medical expenses before applying the AGI-based floor. Taxpayers may only deduct the portion of qualified medical expenses that exceeds 7.5% of AGI, so the floor must be subtracted.
Step by step
- Test the medical purpose
The expense must diagnose, cure, mitigate, treat, or prevent disease, or affect a body structure or function. General wellness spending, including ordinary health-club dues, does not qualify.
- Separate cosmetic from reconstructive care
Exclude procedures performed solely to improve appearance without treating illness or meaningfully promoting proper body function. Include qualifying reconstruction for a deformity caused by a congenital abnormality, injury, or disfiguring disease.
- Check medicines and insulin
Include prescription medicines and insulin, even when insulin is purchased without a prescription. Exclude other nonprescription drugs and vitamins taken for general health from Schedule A medical expenses.
- Check treatment programs
Smoking-cessation programs qualify, but nonprescription nicotine gum and patches do not. A physician-prescribed weight-loss program for diagnosed obesity or hypertension qualifies; weight loss for general health does not.
- Remove amounts already covered
Include eligible after-tax insurance premiums, but exclude pretax cafeteria-plan premiums and expenses covered by tax-free HSA or FSA payments. Subtract insurance reimbursements and do not deduct the same cost elsewhere.
- Apply medical travel limits
Include transportation primarily for and essential to receiving medical care. Qualifying separate lodging is capped at $50 per person per night, including a necessary companion; meals do not qualify.
- Adjust medical home improvements
Include only improvement cost above the increase in home value, plus qualifying operating and maintenance costs. Example: $14,000 cost - $9,000 value increase + $600 operating costs = $5,600 before the AGI floor.
- Subtract the AGI floor
The Schedule A medical deduction equals eligible net expenses minus 7.5% of AGI, but never less than zero. If the question asks for qualified expenses before the floor, stop before this step.
Key points
- Remember: A dentist's bill for appearance-only teeth whitening is still a personal expense.
- Medical costs paid for an otherwise qualifying dependent can count even if the dependent fails the gross-income test.
- Use expenses paid during the tax year, not unpaid bills.
- Nursing-home meals and lodging can qualify when the primary reason for residence is medical care.
How the exam traps you
- Counting all health-related spending. Exclude appearance-only procedures, general wellness items, and nonprescription drugs other than insulin.
- Deducting pretax premiums or reimbursed bills. Exclude pretax premiums and amounts covered by tax-free account payments, then subtract insurance reimbursements.
- Using the full home-improvement cost. Subtract the home's increase in value; add qualifying operating costs, then apply the AGI floor.
Question 2
| Expense / Item | Amount |
|---|---|
| To a licensed nursing home where he lived because he required continual medical care, and the charge included meals and lodging | $12,000 |
| a physician-prescribed smoking-cessation program and prescription drugs to treat nicotine withdrawal | $1,400 |
| taxi fares to and from medical treatments | $300 |
| cosmetic surgery performed solely to improve appearance and not to meaningfully promote proper body function or treat illness | $4,500 |
| nonprescription vitamins taken for general health | $700 |
Hint
Separate expenses that are for medical care from those that are merely health related or personal, and pay close attention to when meals and lodging can be included.
Answer C. Include the $12,000 nursing home charge because Lane resided there due to the need for continual medical care (meals and lodging are includible when the primary reason for residence is medical care). Also include the $1,400 for a physician-prescribed smoking-cessation program and related prescription drugs, and the $300 of transportation to receive medical treatment. Exclude the $4,500 cosmetic surgery (purely for appearance) and the $700 nonprescription vitamins (general health).
Why not A: This totals the nursing home plus taxi fares but omits the physician-prescribed smoking-cessation treatment and prescription drugs, which are deductible when prescribed by a physician to treat nicotine withdrawal.
Why not B: This adds the nondeductible $4,500 cosmetic surgery to the deductible amounts. Cosmetic surgery solely to improve appearance is generally not deductible unless it treats or corrects a deformity or promotes proper body function.
Why not D: This option incorrectly includes both the cosmetic surgery and the $700 of nonprescription vitamins. Nonprescription vitamins taken for general health are personal expenses and are not deductible medical expenses.
Question 3
Hint
Separate the one-time home improvement cost from the home's increase in value, then consider whether any ongoing costs tied directly to that improvement also qualify.
Answer A. A capital expenditure for medical care is deductible only to the extent the cost exceeds the increase in the property's value: $14,000 − $9,000 = $5,000. Direct operating and maintenance costs attributable to the medical equipment are deductible as medical expenses: $600. Therefore, before the AGI floor, Lee may include $5,000 + $600 = $5,600.
Why not B: This option correctly computes the deductible portion of the capital improvement (cost minus increase in value) but omits the additional electricity and maintenance costs of $600 that are directly attributable and deductible.
Why not C: This option wrongly treats the entire capital cost plus operating costs as deductible. For a permanent home improvement, only the portion of the cost that exceeds the increase in property value is deductible as a medical expense.
Why not D: This option treats only the operating costs as deductible and ignores that a medically necessary capital improvement is deductible to the extent its cost exceeds any increase in property value (here, an additional $5,000).
Question 4
Hint
Focus on which cost falls within the tax definition of medical care, not just which cost seems health-related.
Answer B. Insulin is considered a medical care expense for tax purposes and is deductible as a medical expense when the taxpayer itemizes, even if it is purchased without a prescription. The other items listed are personal or cosmetic in nature and do not qualify as deductible medical care under the general rules.
Why not A: This is tempting only because it relates to illness or death, but funeral and burial expenses are personal expenditures and are not deductible as medical care.
Why not C: Many dental procedures are deductible when they treat or correct disease, but purely cosmetic procedures (like teeth whitening done only for appearance) are not deductible medical expenses.
Why not D: General health-club dues for fitness are ordinarily personal expenses and not deductible; only in narrow cases where participation is an essential, prescribed treatment for a specific medical condition would such costs possibly qualify.
Question 5
Hint
First determine which amounts qualify as medical expenses, then apply the Schedule A medical expense limitation.
Answer D. The deductible portion of a capital improvement for medical care equals the cost minus any increase in home value: $30,000 - $18,000 = $12,000. Add operating costs ($1,500 maintenance + $500 electricity = $2,000) for total qualified medical expenses of $14,000. Medical expenses are deductible only to the extent they exceed 7.5% of AGI (0.075 × $100,000 = $7,500), so Nora may deduct $14,000 - $7,500 = $6,500.
Why not A: This would result from applying the 7.5% floor to the full $30,000 capital cost plus $2,000 operating costs (i.e., $32,000 - $7,500 = $24,500), but it fails to reduce the capital expenditure by the $18,000 increase in home value as required.
Why not B: This equals only the capital component after reducing the elevator cost by the increase in fair market value ($30,000 - $18,000). It omits the operating costs ($2,000) and also ignores the 7.5% of AGI floor that must be applied to total medical expenses.
Why not C: This equals the total qualified medical expenses (deductible capital portion $12,000 plus $2,000 operating costs) before applying the 7.5% of AGI limitation, so it overstates the deductible amount.
Question 6
Hint
First identify only qualifying unreimbursed medical expenses, then apply the AGI floor for medical deductions.
Answer C. An individual may deduct unreimbursed qualifying medical expenses only to the extent they exceed 7.5% of AGI. Avery's qualifying unreimbursed medical expenses are $10,000 ($12,000 - $2,000 reimbursement). The 7.5% AGI floor is $7,500, so the deductible amount is $2,500. Elective cosmetic surgery that is not medically necessary is not included.
Why not A: This traps candidates who mistakenly use a 10% AGI floor; if the floor were 10% ($10,000), Avery's unreimbursed qualifying expenses of $10,000 would produce no deduction. Under the 7.5% floor, however, Avery can claim $2,500.
Why not B: This results from incorrectly including the $1,500 elective cosmetic surgery among qualifying medical expenses. That would raise unreimbursed expenses to $11,500, and after the 7.5% floor ($7,500) the deductible portion would be $4,000. Elective cosmetic surgery that is not medically necessary is generally not deductible.
Why not D: This reflects forgetting to apply the AGI floor. Avery's unreimbursed qualifying expenses are $10,000, but only the amount exceeding 7.5% of AGI ($7,500) is deductible, so the full $10,000 cannot be claimed.
Question 7
Hint
First identify which costs qualify as medical care, then apply the AGI percentage floor only to those qualifying amounts.
Answer A. Erin's qualifying medical expenses are $8,000: $9,500 total less $1,000 for cosmetic surgery (not deductible) and $500 for nonprescription vitamins (not deductible). Medical expenses are deductible only to the extent they exceed 7.5% of AGI (0.075 × $80,000 = $6,000). The deductible amount is $8,000 − $6,000 = $2,000.
Why not B: This is tempting if a student applies the 7.5% floor to the full $9,500, but cosmetic surgery for appearance and nonprescription vitamins are not qualifying medical expenses and must be excluded before applying the AGI floor.
Why not C: This reflects correctly identifying qualifying amounts but forgetting the AGI floor. Qualifying medical expenses are deductible only to the extent they exceed 7.5% of AGI, not fully deductible.
Why not D: This is a common stale-rule mistake. The keyed item uses a 7.5% of AGI threshold; under that floor Erin does have a deductible amount.
Question 8
Hint
First separate qualifying medical expenses from nondeductible personal or cosmetic costs, then reduce for reimbursement, and only after that apply the 7.5%-of-AGI floor.
Answer C. Qualifying medical expenses are $1,600 (after-tax health insurance) + $9,000 (medically necessary surgery) + $3,000 (smoking-cessation program) = $13,600. Subtract the $1,000 insurance reimbursement to get $12,600; the deductible portion is the amount exceeding 7.5% of AGI ($100,000 × 7.5% = $7,500), so $12,600 − $7,500 = $5,100. Over-the-counter nicotine gum and purely cosmetic surgery are excluded from qualifying medical expenses.
Why not A: This assumes the $2,000 cosmetic surgery is deductible. Purely cosmetic procedures are not deductible unless they treat a disease or correct a deformity, which the stem expressly disclaims, so the $2,000 must be excluded.
Why not B: Tempting if the candidate treats the $500 of over-the-counter nicotine gum as deductible. However, OTC nicotine gum is a nonprescription drug and is not deductible under the medical-expense rules unless prescribed, so it must be excluded.
Why not D: This result comes from counting all payments (including OTC gum and cosmetic surgery) as medical expenses before applying the reimbursement and AGI floor. Both the OTC nicotine gum and purely cosmetic surgery must be excluded, so this overstates the deduction.
Question 9
Hint
First separate medical expenses from personal expenses. Then net any reimbursement and remember the special rule for a medical home improvement before applying the 7.5% of AGI threshold.
Answer D. Net the reimbursed medical expenses: $5,400 - $1,400 = $4,000. The stairlift is a medical home improvement deductible only to the extent its cost exceeds any increase in the home's value: $3,000 - $1,200 = $1,800. Elective teeth-whitening and health-club dues for general health are nondeductible. Total qualifying medical expenses = $4,000 + $1,800 = $5,800, which is less than 7.5% of AGI (7.5% of $80,000 = $6,000), so no medical expense deduction is allowed.
Why not A: This is tempting because medically necessary home modifications can be deductible and reimbursements reduce deductible expenses. It's incorrect because a home improvement is deductible only to the extent its cost exceeds the increase in the property's value (here $1,800), not the full $3,000, and the correct total qualifying expense ($5,800) is below the $6,000 AGI floor.
Why not B: This is tempting because it correctly nets the insurer reimbursement and excludes the cosmetic teeth-whitening and general health club dues. It's incorrect because it ignores the stairlift: a capital home modification made for medical care can qualify to the extent the cost exceeds the increase in property value, adding $1,800 of qualifying expense.
Why not C: This is tempting because a physician's recommendation can make treatments sound medical and the math ($4,000 + $1,800 + $900 = $6,700; $6,700 - $6,000 = $700) appears consistent. It's incorrect because dues paid to improve general health are personal expenses and not deductible even if recommended by a physician; only the stairlift's excess qualifies.
Common questions
Are cosmetic procedures ever deductible medical expenses?
Purely cosmetic procedures, such as appearance-only teeth whitening, do not qualify. Surgery needed to correct a deformity from a congenital abnormality, injury, or disfiguring disease can qualify.
Can I deduct over-the-counter medicines and vitamins?
For Schedule A, nonprescription medicines generally do not qualify; insulin is the exception. Vitamins taken for general health do not qualify, even when a physician recommends them.
How much medical travel lodging can I deduct?
Qualifying lodging is limited to $50 per person per night, including a necessary companion; meals are excluded. A doctor must provide care in a licensed hospital or related or equivalent facility, and the trip cannot include significant personal pleasure.
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