Itemized Deductions Flashcards
Medical & Dental Expenses Deduction
Must know AGI before deducting because medical expenses must exceed 10% of AGI to be deductible
Medical & Dental Expenses includes
virtually all health related expenses: prescriptions. eyeglasses, transportation, premium on insurance that covers reimbursmen for the cost of prescriptions.
as well as changes to taxpayers house, like a wheelchair ramp. However this MUST increase the value of the propery. ($75K add $50K because of elevator - deduct $25K)
State & Local Income Taxes Deduction
limited to the smaller of Schedule A 5d or $10K.
5d = SAL property taxes and SAL income and sales taxes
SAL income taxes qualificaition
must own house. if you pay for someone else, considered a gift.
foreign property is no longer deductible
SALT EE w/holding
personal property taxes (tax the value of your car annually) - if app. in your state
Acquisition Indebtedness deduction
No more than $750k of mortgage principal up to the interest paid (if mortgage is greater than $750k, deduction is also reduced
Home Equity Loan deduction
deduct home equity loan interest ONLY if the money was used to improve the home
can be used with Home Mortgage Loan if used to fix up home
Mortgage Points
paid when the loan is refinances or acquired.
Each point is a %’age of the loan (i.e. $200k loan with 2 points id $4K)
If the money paid for points represents interest as part of the acquisition debt, it can be deducted immediately. If refinancing, the points must be deducted over the life of the mortgage
Investment Expenses
Deductible against investment income
If you borrow money to invest, the interest paid on the loan is deductible of if the income from the investment is taxable at ordinary income rates.
Dividends and capital gains don’t qualify as investment income unless they are taxes at ordinary income
Charitable Contributions
Donations to qualifying orgs can be deducted
The donation excess if anything in returned if deduced
NOT deductible: donations to foriegn charities, needy families, policitcal campaings
Charitable Contributions Limitations
LTCG - 30% of AGI, remainder is carried forward
Cash - 60% of AGI, remainder is carried forward
Charitable Contributions of clothing or household items
MUST receive a reciept to prove sibstantiation
deduction would be the lower of FV or cost basis
Casuality & Theift Losses
Casuality losses can be used to reduce casuality disaster
presidential declared disaster MUST be declared.
Casuality & Theift Losses deduction
each loss can be reduced by the insurance reimbursement AND $100 AND 10% of AGI
Gambling Losses
Deducted each year, but only to the amount of the winnings reported as income.
TCJA now allows transportation to and from the casino to be included as part of the deduction for gambling losses.
Helps keep casinos open in the era of online gamblin
