Part 1 - Scenario 1

Review the following scenario. Use the information provided to answer questions about the taxpayers 2020 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 2020 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 250 miles 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).
• $80 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

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?

Question 2

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?

1 3 SCHEDULE A Itemized Deductions OMB No. 1545-0074 (Form 1040) Go to www.lrs.gov/Schedule for instructions and the latest Information. 2020 Department of the Treasury Attach to Form 1040 or 1040-SR. Attachment Internal Revenue Service (99) Caution: If you are claiming a not qualified disaster loss on Form 484, see the instructions for line 16. Sequence No. 07 Name(s) shown on Fom 1040 or 1040-SR Your social security no. MELANIE BOLAR XXX-XX-XXXX Caution: Do not include expenses reimbursed or paid by others. Medical 1 Medical and dental expenses (see instructions). and 2 Enter amount from Form 1040 or 1040-SR, Dental Expenses line 11.... 21 35,000 3 Multiply line 2 by 7.5% (0.075) 2,625 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter-O- Taxes You 5 State and local taxes. Paid a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box ..... 5a 1,750 b State and local real estate taxes (see instr.) 5b 2,800 c State and local personal property taxes. 350 d Add lines 5a through 5c.... 4,900 e Enter the smaller of line 5d or $10,000 ($5,000 if married filing separately) 4,900 6 Other taxes. List type and amount 5c 5d 5e 6 4,900 Interest You Paid 7 Add lines Se and 6 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box ..... 0 a Home mortgage interest and points reported to you on Form 1098. See instructions if limited...... b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no. and address 8a Caution: Your mortgage interest deduction may be limited (s00 instructions). 6,000 O 80 6,000 10 6,000 8b c Points not reported to you on Form 1098. See instructions for special rules 8C d Mortgage insurance premiums (see instructions) 8d e Add lines 8a through 8d.... 9 Investment interest. Attach Fom 4952 if required. Soe instructions ... 9 10 Add lines 8e and 9 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more, Charity see instructions Caution: 12 Other than by cash or check. If you made any gift of $250 or more, If you made a 12 gift and got a sce instructions. You must attach Form 8283 it over $500. benefit for it 13 Carryover from prior year 13 see instructions. 14 Add lines 11 through 13 Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified 11 14 0 of income taxes, check this box.. b State and local real estate taxes (see instr.) c State and local personal property taxes..... d Add linos 5a through 5c .......... e Enter the smaller of line 5d or $10,000 ($5,000 if married filing separately)... 6 Other taxes. List type and amount 5a 5b 5c 5d 1,750 2,800 350 4,900 5e 4,900 6 7 4,900 Interest You Paid 7 Add lines Se and 6 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box ....... 0 a Home mortgage interest and points reported to you on Form 1098. See instructions if limited....... b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no. and address 8a Caution: Your mortgage interest deduction may be limited (see instructions). 6,000 o 9 11 12 8b Points not reported to you on Form 1098. See instructions for special rules... 8C d Mortgage insurance premiums (see instructions) .. 8d Add lines 8a through 8d.... 8C 6,000 9 Investment interest. Attach Fom 4952 if required. Soe instructions 10 Add lines 8 and 9 ...... 10 6,000 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more, Charity see instructions Caution: 12 Other than by cash or chock. If you made any gift of $250 or more, If you made a see instructions. You must attach Form 8283 if over $500 gift and got a benefit for it 13 Carryover from prior year 13 see instructions. 14 Add lines 11 through 13 Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified Theft Losses disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See instructions Other 16 Other -- from list in instructions. List type and amount Itemized Deductions Total 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Itemized Form 1040 or 1040-SR, line 12 17 Deductions 18 If you elect to itemize deductions even though they are less than your standard deduction, check this box ........ For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. Schedule A (Form 1040) 2020 14 15 16 $2,408 $4,228 $4,885 $5,208 1 3 2,625 Medical 1 Medical and dental oxponses (sce instructions) and 2 Enter amount from Form 1040 or 1040-SR. Dental Expenses line 11.. 21 35,000 3 Multiply line 2 by 7.5% (0.075) 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter-O- Taxes You 5 State and local taxes. Paid a State and local income taxes or general sales taxes. You may include either income taxes or general sales taxes on line 5a, but not both. If you elect to include general sales taxes instead of income taxes, check this box .. b State and local real estate taxes (see instr.) c State and local personal property taxes. d Add lines 5a through 5c........ e Enter the smaller of line 5d or $10,000 ($5,000 if married filing separately). 6 Other taxes. List type and amount 5a 5b 5c 5d 1,750 2,800 350 4,900 5e 4,900 6 7 4,900 Interest You Paid 7 Add lines 5e and 6 & Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box ........ a Home mortgage interest and points reported to you on Form 1098. See instructions it limited...... b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no., and address 8a Caution: Your mortgage interest deduction may be limited (800 instructions). 6,000 10 6,000 8b 0 c Points not reported to you Form 1098. See instructions for special rules ......... 8c d Mortgage insurance premiums (see instructions) 8d e Add lines sa through 8d..... 80 6,000 9 Investment interest. Attach Fom 4952 if required. Soe instructions .. 9 10 Add lines se and 9 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more, Charity see instructions ... 11 Caution: 12 Other than by cash or check. If you made any gift of $250 or more, If you made a sce instructions. You must attach Form 8283 it over $500.. 12 gift and got a benefit for it 13 Carryover from prior year... 13 see instructions. 14 Add lines 11 through 13 Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified Theft Losses disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See instructions .. Other 16 Other -- from list in instructions. List type and amount Itemized Deductions Total 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Itemized Form 1040 or 1040-SR, line 12 Deductions 18 If you elect to itemize deductions even though they are less than your standard 14 15 0 16 17 ww/ 6 Other taxes. List type and amount 6 7 4,900 Interest You Paid 7 Add lines 5e and 6 8 Home mortgage interest and points. If you didn't use all of your home mortgage loan(s) to buy, build, or improve your home, see instructions and check this box. a Home mortgage interest and points reported to you on Form 1098. See instructions it limited...... b Home mortgage interest not reported to you on Form 1098. See instructions if limited. If paid to the person from whom you bought the home, see instructions and show that person's name, identifying no.. and address 8a Caution: Your mortgage interest deduction may be limited (800 instructions). 6,000 8b c Points not reported to you on Form 1098. See instructions for special rules .... 8C d Mortgage insurance premiums (see instructions) 8d e Add lines sa through 8d..... 8C 6,000 9 Investment interest. Attach Fom 4952 if required. Soe instructions ... 9 10 Add lines se and 9 10 6,000 Gifts to 11 Gifts by cash or check. If you made any gift of $250 or more, Charity see instructions .... 11 Caution: 12 Other than by cash or check. If you made any gift of $250 or moro, If you made a see instructions. You must attach Form 8283 it over $500 12 gift and got a benefit for it 13 Carryover from prior year 13 see instructions. 14 Add lines 11 through 13 14 Casualty and 15 Casualty and theft loss(es) from a federally declared disaster (other than net qualified Theft Losses disaster losses). Attach Form 4684 and enter the amount from line 18 of that form. See instructions .... 15 Other 16 Other -- from list in instructions. List type and amount Itemized Deductions 16 Total 17 Add the amounts in the far right column for lines 4 through 16. Also, enter this amount on Itemized Form 1040 or 1040-SR, line 12 17 Deductions 18 If you elect to itemize deductions even though they are less than your standard deduction, check this box ... For Paperwork Reduction Act Notice, see the Instructions for Forms 1040 and 1040-SR. Schedule A (Form 1040) 2020 $0 $1,603 $2,260 $2,583