Ch 6 - Questions (Itemized Deductions) Flashcards
What are common itemized deductions?
Medical and dental expenses, taxes, interest expenses, charitable contributions, and prior-year tax prep fees.
What does a taxpayer use when itemizing deductions?
Schedule A and form 1040
What is debt incurred to acquire, construct, or improve a taxpayer’s principal or secondary residence?
Acquisition Debt
Are charitable contributions deductible?
Generally yes, if qualified charitable org, and taxpayer uses Schedule A and qualifies to itemize.
What does Medicare Part A cover?
Hospital expenses, care in skilled nursing facility, hospice care, and some health care.
Do people have to pay Medicare Part A premiums?
Not usually, if they or their spouse paid medicare taxes while working.
What does Medicare Part B cover?
Doctors’ services, outpatient care, medical supplies, and preventive services.
Do people have to pay a premium for Medicare Part B?
Yes, most participants have to pay a monthly premium, which is usually withheld from Social Security benefits.
What does Medicare Part D cover?
Prescriptions.
Do people have to pay a premium for Medicare Part D?
Yes, and it is withheld from social security benefits.
How much is the standard deduction for 2017
$6350 Single, and MFS
$9350 for HoH
$12700 for MFJ, QW
What things increase a taxpayer’s standard deduction?
Being age 65 or older, blindness
Which will a taxpayer choose, itemized deductions, or the standard deduction?
Whichever is larger. Also, requires 1040.
If a couple is MFS, and one spouse wishes to itemize, that happens?
The other spouse should itemize as well, otherwise their standard deduction is reduced to $0.
Why might a taxpayer itemize deductions on their federal return, even if their deduction total less than the standard deduction?
Itemizing on their Federal return allows itemizing on state returns, which can save tax dollars.
If a person chooses to itemize when the standard deduction is higher (e.g. so they can itemize on their state return) what should they do?
Mark the box on Schedule A, line 30.
What sections are on the Schedule A?
Medical and Dental expenses Taxes you paid Interest you paid Gifts to charity Casualty and Theft Losses Job expenses and certain misc deductions Other misc deductions
What is included in deductible medical expenses?
Payments made for the diagnosis, cure, treatment, or prevention of disease, and the costs of treatments affecting any part or function of the body. May also include equipment, supplies, transportation related to medical care, and certain health insurance coverage for the taxpayer, spouse, and dependents.
Are medical expenses paid with pre-tax dollars deductible on Schedule A?
No. Only after-tax dollars.
What may be used to determine what medical or dental expenses are deductible on Schedule A?
IRS Publication 502; Medical and Dental Expenses
Are medical expenses paid by a taxpayer for his spouse deductible?
If they were married at the time the expenses were incurred or at the time the expenses were paid.
Can a taxpayer deduct medical expenses paid for a dependent claimed under a multiple-support agreement?
Yes. The persons who waive the exemption may not deduct medical expenses paid for the dependent.
If divorced or separated parents who lived apart during the last 6 months of the year supported a child together, who is able to deduct the medical expenses.
Each parent, whether custodial or non-custodial, is allowed to deduct the medical expenses actually paid for the child during the year. The deduction may be taken even if the other parent is allowed to claim the exemption for the child.
Are prescriptions deductible?
Yes, if the expense has not been reimbursed by insurance, and is not purchased or imported from another country (unless it is legal in the US and the FDA allows importing the drug by individuals)
Are Medical Insurance Premiums deductible?
Yes, if they paid for policies that cover medical care if the insurance provides reimbursement for hospitalization, surgical fees, other medical and dental expenses, prescription drugs, or lost or damaged contact lenses as medical expenses.
If medical insurance is employer-sponsored, are premiums and expenses deductible?
No, unless the premium or other expense amounts are included in Box 1 of the taxpayer’s Form W-2 or paid with after-tax dollars.
Is the payroll tax for Medicare Part A deductible?
No. Although a taxpayer who is not covered under the social security program and who is not a govt employee paying medicare tax may deduct the premiums voluntarily paid for Part A coverage.
Are Medicare Part B premiums deductible?
Yes, as a medical expense.
Are Medicare Part D premiums deductible?
Yes, as a medical expense.
Are payments for qualified long-term care services deductible?
Yes, based on age, they may be able to deduct all or part of premiums.
What are qualified long-term care services?
Services prescribed by licensed health care practitioners for chronically ill individuals. Services must be necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, or rehab services. Or Maintenance or personal care services.
What elements must a qualified long-term care insurance contract have?
It must be guaranteed renewable
It must not provide a cash surrender value
It must not pay or reimburse expenses that would be covered under Medicare.
Refunds and dividends must be used only to reduce future premiums or increase future benefits
Must not apply to refunds on the death of the insured or upon surrender or cancellation of the contract.
Premiums of what types of insurance policies are not deductible?
Policies covering loss of earnings while injured
Policies covering loss of life, limb, or sight.
Policies paying a guaranteed amount for each day (or week) for a given period of time while the taxpayer is hospitalized for sickness or injury. However, if the policy also provides for medical care, and the amounts for each are stated separately, the portion of premium allocated to medical care is deductible.
Policies paying for medical care from a portion of automobile insurance premiums.
What medical expenses are deductible
Deductible medical expenses include most fees paid to medical doctors, dentists, psychologists, psychiatrists, chiropractors, and Christian Science practitioners. Most fees for hospital services, therapy, nursing services, lab tests, and payments for acupuncture treatment are deductible.
Is the cost of a smoking cessation deductible
Yes, as a medical expense. The deduction may include the cost of treatment and prescription drugs designed to alleviate the effects of nicotine withdrawal. Costs for nicotine gum and patches not requiring prescriptions are NOT deductible.
When is a weight loss program or surgery deductible?
If diagnosed as obese, when the weight loss program or surgery is used to treat other diagnosed diseases such as arthritis, diabetes, high cholesterol, or hypertension., Not deductible if no dx of diabetes. The cost of diet food is not deductible.
Is the cost of cosmetic surgery deductible?
No, unless it is necessary to correct or improve a deformity arising from a congenital abnormality, an accident or other trauma, or a disfiguring disease.
Is the cost of medical aid items and equipment deductible?
Yes
Is the cost of purchasing and maintaining a service animal deductible?
Yes
Is the cost of purchasing and maintaining TTY/TDD equipment deductible?
Yes
How are medical capital expenditures handled in terms of deductions?
Cost of equipment and structural improvements in a residence for medical purposes is deductible if there is a medical purpose for its use. If a rented residence, costs deductible in full. If the taxpayer owns the residence, the part of the cost that exceeds any increase in the value of the property.
Does the capital expenditures to remove structural barriers for handicapped individuals deductible?
Yes, fully. Examples, exit or entrance ramps, widening hallways and doorways, installing lifts (not elevators), installing railings, support bars, and other modifications in bathrooms, lowering counters and cabinets, modifying fire alarms, smoke detectors, and other waning systems, modifying stairs, adding handrails or grab bars, modifying hardware on doors, modifying areas in front of entrance and exit doorways, grading of ground to ease access to the residence.
What expenses for medical transportation are deductible?
Expenses in connection with medical care - fares for buses, taxis, planes, trains, and ambulance hire. Mileage for car using standard mileage rate. Parking fees and tolls.
Are meals and lodging deductible as a medical expense?
Yes - If a person is in a hospital, nursing home, or similar institution primary for medical care.
Are lodging expenses for a patient companion deductible?
Yes, if the patient’s expenses are deductible and the patient is unable to travel alone, and if the accommodations are not lavish and there is not a significant amount of pleasure involved.
