What is the AGI threshold for deducting qualified non-reimbursed health expenses?

• A. Currently 10%
• B. Currently 5%
• C. Currently 7.5%
• D. Currently 12%

Answer: (C)

The question tests how the medical expense deduction works with respect to your AGI. You may deduct qualified non-reimbursed medical expenses only to the extent they exceed a floor that’s a percentage of your adjusted gross income. That floor is currently seven and a half percent of AGI. So, you first calculate 7.5% of your AGI, and only the amount of your unreimbursed medical expenses that exceeds that figure can be deducted, provided you itemize deductions on Schedule A.

For example, if your AGI is $60,000, 7.5% equals $4,500. If you have $6,000 in qualified unreimbursed medical expenses, the deductible amount would be $6,000 minus $4,500, which equals $1,500 (assuming you itemize and all other medical deduction rules are met). If your total medical expenses don’t exceed the threshold, there’s nothing deductible. Remember, you must itemize to claim this deduction, and only qualified expenses count.