Chapter 2

Question 1

Calculate Medical Itemized deduction

Answer 1

Amount that exceeds 10% of the taxpayer’s adjusted gross income.

Question 2

Medical Expenses that Qualify for itemized deduction

Answer 2

Transportation to physician’s office for required medical care is a deductible medical expense for tax purposes.

Question 3

Calculate Charitable Contributions itemized deduction

Answer 3

Cash limit = 50% AGI

Non-cash limit = 30% AGI

Question 4

What time period after taxes are paid does the individual have file a claim for refund?

Answer 4

2 years

Question 5

Credit for IRA contributions

Answer 5

Must be: At least 18, Not a full-time student, not a dependent,
Single Income: 
0 - $18,000 = 50%
18,000 - 19,500 = 20%
19500 - 30,000 = 10%

Question 6

Credit for child and dependent care expenses

Answer 6

-Both parents work
-Child under 13 or
-Disables dependent 1/2 supported
-disabled spouse
Limit: $3,000/per dependent
< $15,000 = 35% of expenses
Between $15,000 and $43,000 = 20% to 35%
>$43,000 = 20% of expenses

Question 7

Estimated Tax payments

Answer 7

1. 90% of the current year’s tax, or
2. 100% of the previous year’s tax, or
3. Adjusted gross income in excess of $150,000 in the prior year, 110% of the prior year’s tax liability

Question 8

Self Employment tax

Answer 8

Self-employment tax is NOT an itemized deduction, but 50% can be used as adjustment in arriving at AGI.

Question 9

Calculate Misc. itemized Deduction

Answer 9

Only deduct expenses that exceed 2% of AGI

Question 10

Casualty loss itemized deduction calculation

Answer 10

Smaller loss (lesser of cost or decrease in FMV)
Less: Insurance Recovery
Less: Floor Amount of $100
Less: 10% of AGI
= Deductible Loss