Debt incurred to acquire, construct or improve the taxpayer's principal or secondary residence.
General Sales Tax
Sales tax imposed on retail sales of a broad range of items at a single rate.
• Certain personal expenditures allowed as deduction from AGI.
EXAMPLES: certain medial expenses, qualified interest on home mortgages and charitable contributions.
• Reported on Schedule A.
• A taxpayer who itemizes deductions MAY NOT claim the STANDARD DEDUCTION.
Medicare Part B
• Insurance premium withheld from the benefits of social security recipients.
• The basic premium for 2009 is $96.40 per month ($1,156.80 for entire year).
• The premium will be higher if annual income is more than $85,000 ($170,000 MFJ)
Personal Property Tax
Annual tax imposed on certain personal property, such as cars or boats and based on the value of the property.
A one-time charge that a buyer may deduct as interest; fully in the year paid if for the purchase or improvement of a principal residence or, if not, then over the term of the loan.
• Interest paid in advance is deductible as an interest expense only as it accrues.
• The one exception involves the interest element when a cash-basis taxpayer pays points to obtain financing for the purchase or improvement of a principal residence.
Qualified Charitable Organization
An association or nonprofit corporation, designed to provide some form of public charity or service and specifically approved by the US Treasury as a recipient of deductible charitable contributions.
Medicine & Drugs Deduction
• Prescription drugs and insulin are deductible.
• Nonprescription medicines and vitamin supplements are NOT deductible.
Medical Insurance Premiums Deduction
• Premiums paid are deductible if they provide for reimbursements for hospitalization, surgical fees, other medical or dental expenses, prescription drugs or lost or damaged contact lenses.
• Medicare part B premiums ARE deductible, part A payments are NOT.
Insurance Premiums Nondeductible
• Loss of earnings while injured.
• Loss of life, limb or sight.
• Sickness or injury.
• Medical care from a portion of automobile insurance premiums.
Medical & Dental Expense Deductions
• Medical doctors, dentists, psychologists, psychiatrists, chiropractors and Christian Science practitioners.
• Related transportation; actual costs or $.24 per mile plus parking and tolls.
• Hospital services, therapy, nursing services, laboratory tests and payments for acupuncture.
• Stop-Smoking Programs & prescriptions.
• Weight-Loss Programs & Surgery
Home Mortgage Interest Deduction
• Interest on ACQUISITION debt up to $1 million ($500,000 MFS)
• Interest on HOME EQUITY debt the lesser of:
- $100,000 ($50,000 MFS)
- EQUITY amount (difference of FMV and the remainder acquisition debt)
Mortgage Insurance Premiums Deduction
• Reported on Form 1098 box 4.
• Use the Worksheet for gross income over $100,000 ($50,000 MFS).
See Pub 936.
Investment Interest Deduction
• Up to NET INVESTMENT INCOME (investment income minus expenses other than interest expense)
• Computed on Form 4952
Volunteer Work Deduction
• Out-of-pocket expenses.
• Actual transportation costs
or $.14 per mile plus parking and tolls
Appreciated Property Deduction
• If owner 1 yr or less, then cost of property.
• if owned for more than 1yr, then FMV
• Non cash over $250 requires Form 8283
See Pub 526 Charitable Contributions
Long-Term Care Insurance Deduction Cap
$320 age 40 and less
$600 age 41 through 50
$1,190 age 51 through 60
$3,180 age 61 through 70
$3,980 age 71 and older
Charitable Contributions Deduction
• The amount contributed or value donated (with receipt).
• Must be without receiving anything of equal or great value in return.
• Contributions of $250 or more must have written substantiation from the donee.