A Review of the 2019 Tax File of Gregory,a Single

question 1

Multiple Choice

A review of the 2019 tax file of Gregory,a single taxpayer who is age 40,provides the following information regarding Gregory's 2019 tax status: $$\begin{array} { | l | r | } \hline \text { Adjusted gross income } & \$ 40,000 \\\hline \text { Medical expenses (before percentage limit) } & 5,000 \\\hline \text { Itemized deductions other than medical } & 12,000 \\\hline 2019 \text { potential standard deduction } & 12,200 \\\hline\end{array}$$ In 2020,Gregory receives a reimbursement for last year's medical expenses of $1,200.As a result,Gregory must

• A)include $800 in gross income for 2020.
• B)include $1,200 in gross income for 2020.
• C)reduce 2020's medical expenses by $1,200.
• D)amend the 2019 return.

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Definitions:

Divergence

The act or process of developing in different directions or deviating from a standard.

Compensating Differences

Wage differentials that compensate workers for undesirable job attributes, like risk of injury or undesirable hours.

Nonmonetary Characteristics

Features or aspects of a job or decision that are not related to salary or financial gain, such as workplace environment or job satisfaction.

Wage Differentials

The variations in wage rates due to factors such as occupation, industry, location, and skills level.