REG - Deductions "from" AGI Flashcards
When does a TP itemize deductions?
A TP itemizes deductions when the TP’s total itemized deductions exceed the applicable standard deduction for the TP.
- standard deduction based on the filing status of the TP, whether the TP is a dependent, and is indexed for inflation.
- additional standard deductions are allowed for age and blindness.
What are the standard deduction amounts for 2017 (2016)?
Filing Status. - Basic std ded
a) married, filing jointly; or surviving spouse.-$12,700 ($12,600)
b) married, filing separately. - $6,350 (6,300)
c) head of household - $9,350 ($9,300)
d) single. - $6,350 (6,300)
What is a dependent’s basic standard deduction?
The lesser of:
1) the basic standard deduction for a single TP of $6,300, or
2) the greater of (a) $1,050, or (b) the dependent’s earned income plus $350.
- amount in (1) is different for married filing jointly ($12,600) or HoH ($9,300)
What are the additional standard deductions for age or blindness?
At age 65 or older, or if blind, the TP receives an additional standard deduction of $1,550 (double if both 65 and blind)
- If married then amount is $1,250 for either 65 or blind (double if both).
- If 65 or blind is dependent can claim basic standard deduction plus the additional standard deductions.
Are state, local, or foreign income taxes deductible?
Yes, amounts withheld from salary, estimated payments made during the year, and payments made during the year on a tax for a prior year are deductible from AGI.
Are sales taxes deductible?
For tax years before 2015 a TP can elect to deduct state and local general sales taxes in lieu of income taxes. The amount deductible is either the total actual taxes paid (substantiated by receipts) or amount from IRS-provided table, plus amounts paid for sales tax on motor vehicle, boat or other items per IRS pub 600.
Are real property taxes deductible?
Yes, itemized by person they are imposed on. If sale occurred during year then deduction is apportioned between buyer and seller on a daily basis within the real property tax year (buyer gets date of sale).
-assessments for improvements to real property are not deductible, but increase the basis of the property. However, the portion of the assessment attributable to repairs or maintenance, or to meeting interest charges on the improvements, is deductible as taxes.
Are taxes incurred in the production of income deductible?
Taxes incurred in a trade or business or in the production of income are deductible ABOVE the line. They include:
1) social security and other employment taxes paid by employer
2) federal excise taxes on automobiles, tires, telephone service, and air transportation
3) customs duties and gasoline taxes
4) state and local taxes not deductible as such (stamp or cigarette taxes) or charges of a primarily regulatory nature (licenses, etc.)
What types of taxes are not deductible?
1) federal income taxes
2) federal, state, or local estate or gift taxes
3) social security and other federal employment taxes paid by EE (including self-employment taxes)
4) social security and other employment taxes paid by an employer on the wages of an EE who only performed domestic services (e.g., maid, etc.)
What types of expenses are not deductible as itemized miscellaneous deductions?
1) fees and licenses (auto, marriage, dog tags, etc)
2) home repairs, insurance, rent
3) personal legal expenses
4) life insurance
5) burial expenses
6) capital expenditures
7) illegal bribes and kickbacks
8) fines and tax penalties
9) collateral
10) commuting to/from work
11) professional accreditation fees
12) bar exam fees and incidental expenses in securing admission to the bar
13) medical and dental license fees paid to obtain initial licensing
14) campaign expenses of a candidate for any office & registration fees for primary elections
15) cost of midday meals while working late (except when traveling away from home)
16) political contributions
Are total itemized deductions reduced for high income TPs?
Yes, if AGI exceeds a threshold then certain itemized deductions are reduced by 3% of the excess of AGI over the threshold amount. Single - $259,400 Married, jointly - $311,300 Married, separately - $155,650 HoH - $285,350
Which itemized deductions are subject to the reduction for high income TPs?
Taxes, qualified residence interest, charitable contributions, and miscellaneous itemized deductions (except for gambling).
-reduction cannot exceed 80% of allowable itemized deductions not counting itemized deductions not subject to the reduction (i.e., medical, investment interest, casualty and theft, and gambling losses)
Is there a reduction for personal exemptions for high income TPs?
The deduction for the personal exemption is reduced by 2% for each $2,500 ($1,250 for married filing separately) or fraction thereof by which AGI exceeds a threshold amount.
- $155,650 married filing separtely
- $259,400 single
- $285,350 HoH
- $311,300 married filing jointly
