He is considering using his credit card, at a 12% interest rate, to obtain funds for the purchase. Mason, who is self-employed, does not have adequate savings to replace the car and must borrow money to purchase a new car. Mason uses his car for both business and personal use. Unfortunately, his insurance had lapsed two days before he incurred the loss. Mason Gregg's car was destroyed by a flood that occurred in a Federally declared disaster area. If she receives the reimbursement in 2019 and deducted the expenses in 2018, she must include the reimbursement in gross income to the extent she received a tax benefit from the medical expense deduction in 2018. She should consider her expected marginal tax rates for 20 and determine whether it is better to receive the reimbursement in 2018 or 2019.
If she receives reimbursement in 2018, she must increase her medical expense deduction by the amount of the reimbursement. If she receives reimbursement in 2019, she is not required to reduce her 2018 medical expense deduction by the amount of the anticipated reimbursement. Indicate which of following are tax issues that Cheryl should consider in deciding whether to sign and return the form in December 2018 or January 2019. On December 5, the clinic where she was treated mailed her the insurance claim form it had prepared for her with a suggestion that she sign and return the form immediately to receive her reimbursement from the insurance company by December 31.
Cheryl incurred $8,700 of medical expenses in November 2018.
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