Question

Jayden, a calendar year taxpayer, paid $16,000 in medical expenses and sustained a $20,000 casualty loss in 2019 (the loss occurred in a Federally declared disaster area). He expects $12,000 of the medical expenses and $14,000 of the casualty loss to be reimbursed by insurance companies in 2020. Before considering any limitations on these deductions, how much can Jayden include in determining his itemized deductions for 2019?

Answer 1

Answer: Before considering any limitations on deduction, Jayden can include $16000 of the medical expenses and also $6000 of casualty loss when the itemized deduction in 2019 is determined.

Explanation:

When taxes are filed, the person filing the tax can either choose to itemize their deductions or take the standard deduction.

While the standard deduction is already known, the itemized deductions is being calculated. Itemized deductions are made from medical expenses, donations, mortgage interest etc. and are usually preferred by those that have high incomes.

Before considering any limitations on these deductions, it should be noted that Jayden can include $16,000 which is the medical expenses given in the question and a casualty loss of ($20000 - $14000) = $6000 in determining his itemized deductions for 2019?