R1 M5 - Itemized Deductions

Question 1

-Herbal weight loss supplements and vitamins recommended by physician to improve the taxpayer’s overall health does not count toward medical expense deduction.

• Annual Physical exam counts towards medical expense deduction
• Dental implants counts towards medical expense deduction.

Be careful about the year.

Question 2

Charitable Contribution

Answer 2

• You cannot deduct or itemized service rendered to a charity in your taxes because there is no exchange in value done
• A contemporaneous written acknowledgement is required for donation of $250 or more
• The charitable contribution deduction for long-term appreciated stock is limited to 30% of adjusted gross income.
• A qualified appraisal for real property donations is not required to be attached to the tax return unless the properly value exceeds $5,000 .

Question 3

Tom, age 66, paid the medical expenses of his mother-in-law, age 86. Although Tom provided more than half the support, his mother-in-law does not qualify as his dependent because her gross income was too high. This expenditure is:

A.	A deduction to arrive at adjusted gross income.

B.	Not deductible.

C.	A deduction from adjusted gross income, without limit to an AGI floor.

D.	A deduction from adjusted gross income, subject to an AGI floor.

Answer 3

Choice “D” is correct. Medical expenses are itemized deductions (from AGI), subject to an AGI floor. Tom can deduct the medical expenses paid on behalf of his mother-in-law even though she does not qualify as his dependent because her gross income is too high. The definition of “dependent” for purposes of qualifying medical expenses does not consider the gross income limit.

Choice “A” is incorrect. Medical expenses are an itemized deduction from adjusted gross income, not an adjustment to arrive at adjusted gross income.

Choice “B” is incorrect. See the explanation above.

Choice “C” is incorrect. Medical expenses are subject to an AGI floor.

Question 5

The itemized deduction are referred to as “from AGI” and are reported on schedule A of an individual taxpayer’s Form 1040. A taxpayer itemizes deduction when “from AGI” deductions are greater than standard deduction .

Please list some itemized deductions on schedule A (Form 1040)?

Answer 5

Answer: SIMPLE DGM (D O G M ATE)

S - State and Local (city) Taxes
I - Income taxes (State, local , foreign taxes)
M - Mortgage Interest
P - Personal property taxes (State & Local)
L - Real Estates Taxes (State & Local)
E - Sales taxes

D - Disaster losses (casualty and theft loss)
G - Gift to charities
M Medical and dental expense

Investment interest exp.

Question 6

Paul paid the real estate taxes on his rental apartment building. The real estate taxes are:

A.	A deduction from adjusted gross income, subject to a 10 percent AGI floor.

B.	Not deductible.

C.	A deduction to arrive at adjusted gross income.

D.	A deduction from adjusted gross income.

Answer 6

Choice “C” is correct. Rental property expenses are reported on Schedule E (for AGI), and, subject to the passive activity loss provisions, the net rental income appears on Page 1 of the Form 1040 in arriving at AGI.

Choice “A” is incorrect. Rental property expenses are not an itemized deduction subject to a 10 percent AGI floor.

Choice “B” is incorrect. See explanation for choice “C”.

Choice “D” is incorrect. Rental property expenses are not a deduction from adjusted gross income. They are taken into account in arriving at adjusted gross income.