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1. Look at the Form 1040 you prepared for Mukesh and Sarita. What is the amount on Form 1040, Line 40?
- [ ] a. a. $ 9,530.
- [ ] b. b. $ 9,330.
- [ ] c. c. $ 10,700.
- [ ] d. d. $ 9,816.
2. Look at the Form 1040 you prepared for Mukesh and Sarita. What is the amount on Form 1040, Line 76?
- [ ] a. a. $ 193.
- [ ] b. b. $ 143.
- [ ] c. c. $ 58.
- [ ] d. d. $ -0-.
3. Maintenance or personal care services is care which has as its primary purpose the providing of a chronically ill individual with needed assistance with his or her disabilities (including protection from threats to health and safety due to severe cognitive impairment).
4. You cannot include in medical expenses amounts paid for admission and transportation to a medical conference if the medical conference concerns the chronic illness of yourself, your spouse, or your dependent.
5. Last year, Eduardo had $500 of medical expenses. He cannot deduct the $500 because it is less than 7.5% of his adjusted gross income. This year, Eduardo was reimbursed $400 of the medical expense. Eduardo
- [ ] a. a. needs to include $400 in his gross income.
- [ ] b. b. does not include $400 in his gross income.
- [ ] c. c. needs to include $500 in his gross income.
- [ ] d. d. needs to include $500 in his medical expenses deduction.
6. You can include medical expenses you paid for your spouse. To include these expenses, you must
- [ ] a. a. have been married to your spouse at the time your spouse received the medical services.
- [ ] b. b. have been married to your spouse at the time you paid the medical expenses.
- [ ] c. c. both A or B are correct.
- [ ] d. d. none of the above.
7. Mary received medical treatment before she married Bill. Bill paid for the treatment after they married. Bill and Mary are filing separately. Bill
- [ ] a. a. can include these expenses in figuring his medical expense deduction.
- [ ] b. b. cannot include these expenses in figuring his medical expense deduction because he is filing separate returns.
- [ ] c. c. cannot include these expenses in figuring his medical expense deduction because Mary received medical treatment before she married Bill.
- [ ] d. d. None of the above.
8. This year, Gregorio paid medical expenses for his wife Rosita who died last year. Gregorio married Rosalinda this year and they file a joint return. Gregorio
- [ ] a. a. cannot include Rosita's medical expenses in figuring his medical deduction for this year because he has remarried.
- [ ] b. b. can include Rosita's medical expenses in figuring his medical deduction because he was married to Rosita when she received the medical services.
- [ ] c. c. cannot include Rosita's medical expenses in figuring his medical deduction because he is no longer married to Rosita.
- [ ] d. d. None of the above.
9. A person generally qualifies as your dependent for purposes of the medical expense itemized deduction if
- [ ] a. a. the person was a qualifying child.
- [ ] b. b. the person was a qualifying relative.
- [ ] c. c. the person was a U.S. Citizen or national or a resident of the U.S., Canada or Mexico.
- [ ] d. d. All of the above.
10. Your adjusted gross income is $40,000, 7.5% of which is $3,000. You paid medical expenses of $2,500. You
- [ ] a. a. can deduct $2,500 of your medical expenses.
- [ ] b. b. can deduct $3,000 of your medical expenses.
- [ ] c. c. can deduct $2,250 of your medical expenses.
- [ ] d. d. cannot deduct any of your medical expenses because they are not more than 7.5% of your adjusted gross income.
11. You and your three brothers each provide one-fourth of your mother's total support. Under a multiple support agreement, you treat your mother as your dependent. You paid all of her medical expenses. Your brothers prepaid you for three-fourths of these expenses. In figuring your medical expense deduction,
- [ ] a. a. your brothers can include all of the expenses because there are three of them.
- [ ] b. b. you can include all of your mother's medical expenses in your medical expense deduction.
- [ ] c. c. you can include only one-fourth of your mother's medical expenses.
- [ ] d. d. your brothers can include three-fourths of these expenses.
12. Qualified medical expenses paid before death by the decedent are not deductible if paid with a tax-free distribution from any Archer MSA or health savings account.
13. Xwaan has diabetes and uses a blood sugar test kit to monitor his blood sugar level. Xwaan can include the cost of the blood sugar test kit in his medical expense deduction.
14. When figuring the amount of insurance premiums you can deduct on Schedule A, include any health coverage tax credit advance payments shown in box 1 of Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments.
15. You are a federal employee participating in the premium conversion plan of the Federal Employee Health Benefits (FEHB) program. Your share of the FEHB premium is paid by making a pre-tax reduction in your salary. Because you are an employee whose insurance premiums are paid with money that is never included in your gross income, you can deduct the premiums paid with that money.
16. Xwanita drove $2,800 miles for medical reasons during the year. She spent $250 for gas, $5 for oil and $50 for tolls and parking. She wants to figure the amounts she can include in medical expenses both ways to see which gives her the greater deduction. As a result, Xwanita includes
- [ ] a. a. $610 of car expenses with her other medical expenses.
- [ ] b. $305 she figured using actual expenses.
- [ ] c. c. $560 she figured using mileage at a rate of 20 cents a mile.
- [ ] d. d. $250 she spent for gas for the trip.
17. Last year Joe's niece was his dependent. This year she no longer qualifies as his dependent. However, he paid $800 this year for medical expenses she incurred last year when she was his dependent. Which of the following is correct?
- [ ] a. a. Joe cannot include the $800 in figuring this year's medical expense deduction.
- [ ] b. b. Joe can include the $800 in figuring this year's medical expense deduction.
- [ ] c. c. Joe can postpone including the $800 in Medical expenses until his niece becomes his dependent again.
- [ ] d. d. None of the above.
18. Which of the following is deductible as medical insurance:
- [ ] a. a. Medical portion of auto insurance policy that provides coverage for all persons injured in or by your car because the part of the premium for you, your spouse and your dependents is not stated separately from the part of the premium for medical care for other.
- [ ] b. b. Insurance policy that pays you $50 if you are unable to work due to illness or injury.
- [ ] c. c. Medicare Part B
- [ ] d. d. None of the above
19. John is a cash basis taxpayer. During the year he incurred the following expenses for himself and his son, Michael, whom he claims as a dependent on his return.
$800 for braces.
$100 for babysitting so he could visit the chiropractor.
$900 for emergency room services for Michael; $875 was covered by insurance. John paid the remaining $25 in the next year.
John's medical expense deduction before limitation is:
- [ ] a. a. $1,700
- [ ] b. b. $825
- [ ] c. c. $900
- [ ] d. d. $925
20. Which of the following will not be deductible as a medical expense?
- [ ] a. a. The amount you pay for cosmetic surgery.
- [ ] b. b. Modifying the hardware on doors
- [ ] c. c. Lowering the kitchen cabinets
- [ ] d. d. Building entrance and exit ramps
21. Alice paid her mother's hospital bill. Her mother is not her dependent. Alice can deduct the hospital bill as a medical expense on her return because she paid it for a family member.
22. Which of the following is a medical deduction?
- [ ] a. a. Legal abortion
- [ ] b. b. Maternity clothes
- [ ] c. c. Health club dues to improve one's general health.
- [ ] d. d. Dancing lessons that are recommended by a doctor.
23. What are deductible medical care expenses?
- [ ] a. a. Expenses for diagnosis, cure, mitigation, treatment, or prevention of disease.
- [ ] b. b. Expenses for treatments affecting any part or function of the body
- [ ] c. c. Expenses primarily to alleviate or prevent a physical or mental defect or illness.
- [ ] d. d. All of the above
24. You can deduct only the amount of your medical and dental expenses that is
- [ ] a. a. more than 2% of your adjusted gross income (Form 1040, line 38).
- [ ] b. b. more than 7.5% of your adjusted gross income (Form 1040, line 38).
- [ ] c. c. more than 10% of your adjusted gross income (Form 1040, line 38).
- [ ] d. d. more than 20% of your adjusted gross income (Form 1040, line 38).
25. You must reduce your total medical expenses for the year by all reimbursements for medical expenses that you receive from insurance or other sources during the year. If you were reimbursed more than your medical expenses, you
- [ ] a. a. don't need to include the excess in income.
- [ ] b. b. you can refunded it to the company that reimbursed you more than your medical expenses.
- [ ] c. c. you can keep it in a savings account for a period of two years that way you don't need to include it in income.
- [ ] d. d. may have to include the excess in income.
26. If you receive an amount in settlement of a personal injury suit, the part that is for medical expenses deducted in an earlier year is included in income in the later year if your medical deduction in the earlier year reduced your income tax in that year.
27. A legally adopted child is treated as your own child. This child includes a child lawfully placed with you for legal adoption. If you pay back an adoption agency or other persons for medical expenses they paid under an agreement with you, you are treated as having paid those expenses provided you clearly substantiate that the payment is directly attributable to the medical care of the child. You cannot include expenses as medical expenses
- [ ] a. a. For care while going through the court system.
- [ ] b. b. For care that was provided and paid for before the adoption was legally in effect.
- [ ] c. c. For care that was provided and paid for before adoption negotiations began.
- [ ] d. d. None of the above.
28. As a result of an accident, Thomas is required by his doctor to use a wheelchair. He arranges to have a ramp built at his front door and widens all the doorways to accommodate his wheelchair. The value of his house is not increased. The total cost of these improvements is deductible as a medical expense.
29. In March 2007, Phillip and Denise signed a contract with their son's dentist for braces. Jason, their son, is 9 years old and is claimed as a dependent on their return. The contract calls for a down payment in March of $200 and 12 monthly payments starting May 1st of $100 thereafter. They can deduct
- [ ] a. a. $ 1,000 for 2007.
- [ ] b. b. The entire amount for year 2007 tax return as medical expense since they are obligated for the total amount regardless of when services were provided.
- [ ] c. c. $ 1,400 for 2007.
- [ ] d. d. None of the above
30. Steve had a heart ailment. On his doctor's advice, he installed an elevator in his home so that he would not have to climb stairs. The cost of the elevator was $7,000. An appraisal shows that the elevator increased the value of his home by $5,000. Steve can claim a medical deduction of:
- [ ] a. a. $2,000
- [ ] b. b. $5,000
- [ ] c. c. $7,000
- [ ] d. d. None of the above
31. Look at the Form 540 you prepared for Mukesh and Sarita. What is the amount on Form 540, Line 18?
- [ ] a. a. $ 9,530.
- [ ] b. b. $ 7,032.
- [ ] c. c. $ 9,330.
- [ ] d. d. $ 9,816.
32. Look at the Form 540 you prepared for Mukesh and Sarita. What is the amount on Form 540, Line 66?
- [ ] a. a. $ 131.
- [ ] b. b. $ 141.
- [ ] c. c. $ 85.
- [ ] d. d. $ 135.
33. For California, taxpayer benefits are extended to include the taxpayer's registered domestic partner and their dependent (s) for medical expenses and health insurance benefits that occur on or after 1/1/02.
34. If you received a tax-free HSA distribution for qualified medical expenses, enter the qualified expenses paid that exceed 7.5% of federal AGI as an adjustment to your California itemized deductions.
35. To determine the amount of the California itemized deduction adjustment
- [ ] a. a. Calculate the medical expense deduction for California.
- [ ] b. b. Calculate the medical expense deduction for federal.
- [ ] c. c. Subtract the federal amount from the California amount and enter the amount on line 41, as a positive amount.
- [ ] d. d. All of the above
36. As with California, federal law also includes the provision for medical benefits paid on behalf of registered domestic partners.