As the result of unexpected surgery, Jan incurs $14,000 of medical expenses in December. Jan's medical insurance company had paid $5,000 before the end of the year. Because her AGI is $30,000 and there is a 10% floor for medical deductions, Jan can deduct medical expenses over $3,000. Her other itemized deductions exceed her standard deduction.
a. If Jan pays the $9,000 balance of her medical expenses before year end, can she claim a medical deduction? If so, how much?
b. If she is reimbursed $7,000 next year by the insurance company, how will the reimbursement be treated?