tbiles99
tbiles99
19.03.2020 • 
Business

In 2018, Cassidy, a single taxpayer with no dependents, was severely hurt in a farm accident. Cassidy is 38 years old. The accident left Cassidy's legs 85% paralyzed. After incurring $14,000 of medical expenses at the hospital, the doctor recommended that Cassidy install a pool at her home for therapy. The pool cost $25,000 to install and increased the value of her home by $22,000. She spent $930 maintaining the pool in 2018 and $1,060 in 2019. Cassidy also purchased a wheelchair on December 28, 2018, for $2,300, which she charged to her credit card. She paid her credit card bill on January 6, 2019. She also purchased a hospital bed for $3,800 but did not pay for the bed until 2019. Cassidy paid her physical therapist $4,000 for services performed in 2019. Cassidy paid $1,200 in medical insurance premiums on an after-tax basis in both 2018 and 2019. In 2019, the insurance company reimbursed Cassidy $9,000 for her hospital stay in 2018. Her AGI for 2018 and 2019 is $38,000 and $43,000, respectively, not considering any of the above items. Cassidy has no other itemized deductions in either year.

a. What is Cassidy's taxable income for 2018?
b. What is Cassidy's medical expense deduction for 2019? How does she treat the reimbursement?

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