Enrolled Agent Exam Practice 2026 – Complete Prep Guide

To determine how much of the $10,000 in unreimbursed medical bills can be covered by IRA distributions for an individual with an AGI of $70,000 and age 50, it is important to understand the tax implications of withdrawing from an IRA and the medical expense deduction rules.

For the tax year, an individual can deduct unreimbursed medical expenses to the extent they exceed 7.5% of their Adjusted Gross Income (AGI). In this case, the AGI is $70,000. Therefore, the threshold is calculated as follows:

7.5% of $70,000 equals $5,250. This means that only medical expenses exceeding $5,250 can be deducted.

The individual has $10,000 in medical expenses. After subtracting the threshold ($5,250) from the total medical expenses, we find that $4,750 can be deducted—the difference between the total medical bills and the threshold.

Since this deduction effectively limits the tax benefit on the IRA distribution used to cover medical bills, the individual would be able to withdraw IRA distributions up to the deductible amount associated with those medical costs. Thus, it is permissible for this individual to cover $4,750 in unreimbursed medical