Mr. Applegate, a disabled SSI recipient who is working, charges an IRWE which costs
$240 (i.e., purchase price plus applicable tax) on a credit card that has an annual
interest rate of 18%. Because there was already a balance on the account prior to
the IRWE purchase, you treat the IRWE as a nonrecurring expense.
You calculate the interest on the IRWE purchase to be $43.20 ($240 × 18%). You determine
the deductible IRWE amount to be $283.20.
You ask Mr. Applegate whether he wants the IRWE amount deducted entirely in the month
charged or prorated over a consecutive 12-month period. He decides to have it prorated.
You deduct $23.60 ($283.20/12) a month as IRWE for 12 consecutive months beginning
with the month the IRWE was charged.