R2 - Adjustments and Itemized Deductions

Question 1

What is the IRA contribution limit for 2014?

Answer 1

$5,500 (+ $1,000 for catch-up contributions if over 50)

Question 2

What are the three requirements for moving expenses to be deductible?

Answer 2

New workplace 50+ more miles away
39 week stay
Only direct costs and reimbursements are not adjustable

Question 3

T/F: Lodging expenses are adjustable as a moving expense

Answer 3

True

Question 4

What are the two qualifications for an IRA contribution to be non-deductible?

Answer 4

Excessive AGI ($60K+) and active participation in another qualified plan

Question 5

T/F: Being blind and/or over 65 entitles the taxpayer to another exemption

Answer 5

False; it entitles the taxpayer to an increased standard deduction

Question 6

What is the maximum itemized deduction phase-out (i.e. what percentage is the minimum that will be allowed)?

Answer 6

Reduced by 3%, up to 80% (of the itemized deductions will be allowed)

Question 7

What are the four items that are not affected by the itemized deduction limitation?

Answer 7

GIMC
Gambling losses
Investment interest expense
Medical expenses
Casualty and theft losses

Question 8

T/F: Real estate taxes do not include street, sewer or sidewalk assessments

Answer 8

True

Question 9

What are the three types of nondeductible taxes (for itemized deductions)?

Answer 9

FIB
Federal taxes
Inheritance taxes
Business/rental property

Question 10

What are the percentage deduction limits for cash and FMV property contributions?

Answer 10

Cash = 50% of AGI

FMV property = 30% of AGI

Question 11

T/F: Long-term appreciated property is limited to the lesser of basis or FMV

Answer 11

False; the limitation to basis or FMV is for most property (but appreciated LT property is deductible @ FMV)

Question 12

How long may excess charitable contributions be carried over?

Answer 12

5 years

Question 13

What is the limitation for casualty and theft loss and what are the qualifications?

Answer 13

10% of AGI + $100 per event; also, it must be sudden and unexpected and must submit an insurance claim

Question 14

How much income under a nonaccountable plan for business expense reimbursement is included in taxable income?

Answer 14

100%

Question 15

For how many years may student interest be deducted?

Answer 15

Indefinitely as long as actual paid (also may not exceed $2,500 annually)

Question 16

T/F: Half of meal expense is deductible for moving expenses

Answer 16

False; none is deductible

Question 17

T/F: The deduction by an individual taxpayer for interest on investment indebtedness is limited to the taxpayer’s net investment income for the year

Answer 17

True; (investment income - investment expenses (other than interest) = net investment income

Question 18

How much is deductible per year for gifts (per individual recipient)?

Answer 18

$25, subject to 2% (if unreimbursed employee expense)

Question 19

T/F: Expenses for wigs for a chemotherapy patient are deductible as a medical expense

Answer 19

True

Question 20

T/F: Medical expenses paid on behalf of another person who is not your dependent

Answer 20

True, only if the reason they are not the dependent is due to their AGI or joint return filing status