🎯Medical Expenses: 8 MCQs

Responses

1. 

   Joon Kim 10 January 2026

   Just wanted to make sure my logic is right. For medical insurance premium, for employee and individuals, the premium is deductable as itemized deduction (From AGI). For self-employed person, the premium is ductable as business expense (FOR AGI)?

   1. 

      Maroun, CPA 12 January 2026

      Hello Joon,

      Your general logic regarding “For AGI” vs. “From AGI” is correct, but there is a specific technical nuance for the self-employed deduction that is important for the exam.

      Regarding employees or individuals paying out-of-pocket, you are absolutely right. These premiums are treated as an Itemized Deduction (From AGI) reported on Schedule A. Just remember that these are subject to the 7.5% AGI floor, meaning you only get a tax benefit if your total medical expenses exceed that threshold.

      For self-employed individuals, you are also correct that it is a “For AGI” deduction, but we have to be careful not to call it a “Business Expense.” Technically, it is classified as an Adjustment to Income on Schedule 1, rather than a business expense on Schedule C.

      This distinction is critical because if it were a Schedule C expense, it would lower your Self-Employment Tax. The IRS allows this deduction to lower your Income Tax, but not your Self-Employment Tax. Thus, while your location logic (For AGI) was right, the specific classification is slightly different.

      Keep up the good work!