Interview Notes• Luther, age 54, and Lexi, age 56, are married and file a joint return.Lexi has family coverage through her High Deductible Health Plan (HDHP) at work. In 2023, Lexi contributed $2,350 to herHealth Savings Account (HSA). Luther made contributions totaling $3,000 to his HSA in 2023.Luther's Form 1099-SA shows a distribution from his HSA of $3,000. They have receipts showing they paid:o $300 for new eyeglasses for Lexi,o $2,200 in copays for doctor visits and tests,o $400 for over the counter medication, and●o $100 for Personal Protective Equipment (PPE) to prevent the spread of COVID-19 and home COVID-19 tests• In April 2023, Luther was diagnosed by his physician with a terminal illness. In May, Luther and Lexi decided to take a luxuryvacation before his health deteriorated. They used a distribution from Luther's IRA to pay for it. They received a Form 1099-Rshowing $15,000 in Box 1, and code 1 in Box 7.Lexi sold a used handbag on an online marketplace. She received a Form 1099-K reporting the $700 sale. She originally paid$1,000 for the bag.●9. According to the Form 1099-K FAQs on IRS.gov, on Form 1040, Schedule 1, Lexi should report $700 on the Other Income lineand $700 on the Other Adjustments line, labeling both entries as "Form 1099-K Personal Item Sold at a Loss $700".

The correct answer is b. On Form 1040, Schedule 1, she should report $700 on the Other Income line…

Answered: o $2,200 in copays for doctor visits…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Martha and Louis Mitchell are a dual-career couple who just had their first child. Louis, age 30, already has a group life insurance policy, but Martha's employer does not offer a life insurance benefit. A financial planner is recommending that the 27- year-old Martha buy a $250,000 whole life policy with an annual premium of $1,670 (the policy has an assumed rate of earnings of 5 percent a year). Help Martha evaluate this advice and decide on an appropriate course of action .
LO.2Barbara incurred the following expenses during 2020: $840 dues at a health club she joined at the suggestion of her physician to improve her general physical condition, $240 for multiple vitamins and antioxidant vitamins, $3,500 for a smoking cessation program, $250 for nonprescription nicotine gum, $2,600 for insulin, and $7,200 for funeral expenses for her mother who passed away in June. Barbara's AGI for 2020 is $54,000. What is Barbara's medical expense deduction for 2020? 1
Ray had a terminal illness that would require almost constant nursing care for the remaining two years of his estimated life, according to his doctor. Albert had a life insurance policy with a face amount of $100,000. He had paid $25,000 of premiums on the policy. The insurance company has offered to pay him $80,000 to cancel the policy, although its cash surrender value was only $55,000. He accepted the $80,000. Albert used $15,000 to pay his medical expenses. Albert made a miraculous recovery and lived another 20 years. As a result of cashing in the policy: a.Albert must recognize $55,000 of gross income, but he has $15,000 of deductible medical expenses. b.Albert must recognize $65,000 ($80,000 – $15,000) of gross income. c.Albert is not required to recognize any gross income because of his terminal illness. d.Albert must recognize $40,000 ($80,000 – $25,000 – $15,000) of gross income.
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Required information [The following information applies to the questions displayed below.] Julie paid a day care center to watch her two-year-old son while she worked as a computer programmer for a local start- up company. What amount of child and dependent care credit can Julie claim in 2021 in each of the following alternative scenarios? Use Exhibit 8-10 a. Julie paid $2,500 to the day care center and her AGI is $51,000 (all salary). Child and dependent care credit S 1.040 b. Julle paid $6,250 to the day care center and her AGI is $51,000 (all salary). Child and dependent care credit S 2,600 X c. Julle paid $6,500 to the day care center and her AGI IS $125,300 (all salary). Child and dependent care credit d. Julie paid $4,500 to the day care center and her AGI is $400,300 (all salary). Child and dependent care credit e. Julle paid $6,500 to the day care center and her AGI is $14,000 ($4,500 salary and $9,500 unearned Income). Child and dependent care credit

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