TAX: Itemized Deductions- Medical, Taxes, and Interest

Question 1

Medical expenses are deductible for whom for a taxpayer?

Answer 1

Taxpayer, spouse, and a dependent (gross income and joint return tests do not apply for this purpose)

Question 2

What types of items are deductible?

Answer 2

Really any legitimate type of medical care that is not elective are going to be included.

• Dental
• Prescription drugs
• Equipment
• Transportation
• Medical insurance premiums (REMEMBER)
• Alcohol and drug rehab
• Weight loss programs if they are prescribed by a professional

Question 3

What are not deductible for medical expenses?

Answer 3

Funeral 
Cosmetics 
Health spas 
Nonprescription drugs (except insulin) 
- Disability Insurance (NOT INCLUDED)

Question 4

What is the formula for Medical Expenses?

Answer 4

Qualified Medical Expenses
- Reimbursement from Insurance (In the YEAR PAID)
- 10% of AGI
= Deductible Medical Insurance

Question 5

What are the requirements to deduct real estate taxes?

Answer 5

if. the property is used for personal purposes

State and local taxes by the person who is legally liable for the tax

Foreign property are no longer deductible in 2017 (Tested)

Question 6

What type of income taxes are deductible?

Answer 6

Foreign, state, and local taxes are itemized deductions, even if partially due to business income.

Question 7

What are the rules on state vs sales income tax?

Answer 7

An individual can deduct sales income tax or sales tax (whatever is greater)

Question 8

Property taxes are usually not deductible unless it is based on?

Answer 8

Value of the pretty (ad valorem) are deductible

Question 9

What is the overall limits for taxes related to one’s personal life?

Answer 9

10,000 (5,000 for MFS)

Question 10

What type of taxes are not deductible?

Answer 10

Federal income tax
Federal state or local ESTATE or GIFT taxes
Social Security and other federal employment taxes paid
Foreign real property tax

Question 11

Examples of personal interest, is this deductible?

Answer 11

Credit card interest, car loan interest, and interest on income tax underpayments is not deductible.

NOT DEDUCTIBLE

Question 12

What is investment interest expense? Is it deductible

Answer 12

Expense on stocks, bonds, etc.

It is deducible, but its limited to net investment income

Question 13

Can you deduct interest on a mortgage?

Answer 13

Interest paid or incurred on acquisition indebtedness (when you bought a home or constructed a home). Debt is limited to $750,000.