Which statement about the AGI threshold for deducting qualified non-reimbursed health expenses is true?

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Prepare for the North Carolina Health Insurance Test. Study with flashcards and multiple choice questions; each comes with hints and explanations. Get ready for your assessment!

Multiple Choice

Which statement about the AGI threshold for deducting qualified non-reimbursed health expenses is true?

Explanation:
The key idea is that you can deduct qualified medical expenses only to the extent they exceed a set percentage of your adjusted gross income (AGI). That threshold is currently 7.5%, so you subtract 7.5% of your AGI from your total qualified non-reimbursed medical expenses; only the amount above that floor is deductible, and only if you itemize deductions on your tax return. For example, with an AGI of $60,000, the threshold is $4,500. If you have $6,000 in qualified unreimbursed medical expenses, $1,500 would be deductible (assuming you itemize). This deduction applies to expenses you pay out of pocket and that aren’t covered by insurance. Other percentage options aren’t the current rule, though in the past the threshold has varied. The present rule, which the question hinges on, is 7.5%.

The key idea is that you can deduct qualified medical expenses only to the extent they exceed a set percentage of your adjusted gross income (AGI). That threshold is currently 7.5%, so you subtract 7.5% of your AGI from your total qualified non-reimbursed medical expenses; only the amount above that floor is deductible, and only if you itemize deductions on your tax return. For example, with an AGI of $60,000, the threshold is $4,500. If you have $6,000 in qualified unreimbursed medical expenses, $1,500 would be deductible (assuming you itemize). This deduction applies to expenses you pay out of pocket and that aren’t covered by insurance.

Other percentage options aren’t the current rule, though in the past the threshold has varied. The present rule, which the question hinges on, is 7.5%.

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