During 2019, Kathy, who is self-employed, paid $650 per month for an HSA contract that provides medical insurance coverage with a $3,000 deductible. The plan covers Kathy, her husband, and their three children. Of the $650 monthly fee, $300 was for the high-deductible policy, and $350 was deposited into an HSA. How much of the amount paid for the high-deductible policy can Kathy deduct as a deduction for AGI?
What will be an ideal response?
Because Kathy is self-employed, she can deduct $3,600 ($300 per month × 12 months) of the amount paid for the high-deductible policy as a deduction for AGI. In addition, she may deduct the $4,200 ($350 per month × 12 months) paid to the HSA as a deduction for AGI. Thus, Kathy may deduct $7,800 ($3,600 + $4,200) for AGI.
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