Personal Expenses

Question 1

General Rule on Personal Expenses

Answer 1

Absent express statutory authority, personal, living, and family expenses are NOT deductible

Question 2

Allowed Itemized Deductions: Interest Paid on Loan Secured by Taxpayer’s Residence

Answer 2

If debt used to buy, build, or improve residence, interest allocable to first $750,000 of debt is deductible

Question 3

Allowed Itemized Deductions: State and Local Taxes Paid

Answer 3

$10,000 cap on total amount of this deduction

Ex: Real property taxes on your home, state vehicle registration, state
personal property taxes, state income tax, state sales tax

Question 4

Allowed Itemized Deductions: Casualty Losses

Answer 4

Loss realized from a casualty or theft

Amount of deduction = the loss in value of the property or the taxpayer’s basis in the property

Loss deductible only to extent it exceeds $100 and 10% of taxpayer’s AGI
whichever is less

Question 5

Allowed Itemized Deductions: Charitable Contributions

Answer 5

Total deduction may not exceed a specific percentage limitation (generally 60% of AGI)

Question 6

Allowed Itemized Deductions: Medical Expenses

Answer 6

Expenses for medical care of taxpayer, spouse, and dependents

Deductible to the extent they exceed 10% of AGI

Drug costs are deductible only when the medications are prescribed