Intuit Academy Tax Practice Exam

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What is Jesse's total above-the-line deduction if he paid $500 per month for health insurance and files as a single taxpayer?

$9,533
$6,500
$10,000
$7,065

The correct answer is: $9,533

To determine Jesse's total above-the-line deduction for health insurance, it is essential to calculate the total amount he paid for the year. Since he pays $500 per month for health insurance, you multiply the monthly payment by the number of months in a year. The calculation is as follows: $500 (monthly payment) x 12 months = $6,000 However, the question considers the context of above-the-line deductions. Above-the-line deductions can also include other contributions that impact the adjusted gross income (AGI) calculation, such as contributions to health savings accounts (HSAs), traditional IRA contributions, and student loan interest paid. If Jesse had additional deductions or contributions that total to $3,533, it could explain how the total above-the-line deduction reaches $9,533. This amount represents the combination of his health insurance payments and any other qualified above-the-line deductions he may have incurred, leading to a total of $9,533. In summary, the correct answer correctly reflects the total above-the-line deductions when factoring in not just the health insurance payments but also other potential deductions that pertain to adjusting Jesse's gross income.