For a taxpayer with $5,225 in unreimbursed medical expenses and an AGI of $45,000, what is the maximum allowable deduction?

To determine the maximum allowable deduction for unreimbursed medical expenses, it is essential to understand the rules governing medical expense deductions. Taxpayers can only deduct the amount of their unreimbursed medical expenses that exceeds a specific percentage of their adjusted gross income (AGI).

For tax years through 2023, the threshold for medical expense deductions is 7.5% of AGI. In this case, the taxpayer has an AGI of $45,000. To calculate the threshold, you must multiply the AGI by 7.5%:

$45,000 × 0.075 = $3,375.

Next, we compare the taxpayer's unreimbursed medical expenses, which total $5,225, to the threshold of $3,375. The deductible amount is calculated by subtracting the threshold from the total unreimbursed medical expenses:

$5,225 (total medical expenses) - $3,375 (threshold) = $1,850.

Thus, the maximum allowable deduction for this taxpayer is $1,850. This deduction reflects the medical expenses that exceed the percentage of AGI threshold, aligning with IRS regulations on medical expense deductions.