Isabella pays $500 each month in after tax dollars for health insurance premiums. She is not self-employed. During the current year, she also incurred $200 in doctor bills and $50 in over-the-counter medications. Her AGI is $45,000. What amount will she be able to deduct as an itemized deduction after the AGI floor is applied?

Explanation:

monthly health tax = $500

Total for the year = $500 × 12 = $6000

Doctor bills = $200

AGI = $45,000

Note: Taxpayers under the age of 65 are not able to deduct medical expenses until they exceed 10% Adjusted Gross Income(AGI), which is calculated as the difference between the Total Gross Income and some deductibles.

Isabella is 50, and can only deduct medical expenses when they exceed 10% of AGI.

TOTAL medical expenses = $6000 +$200 = $6200

10% of AGI = 45,000 × 0.1 = $4500

Therefore, Health expenses is more than 10% AGI.

Therefore, itemized deduction;

$6200 - $4500 = $1700