Adjustments and Deductions from AGI

Question 1

What % of AGI must qualified medical and dental expenses exceed to be deductible?

Answer 1

10% of AGI

Question 2

What is the allowable deductions to an IRA?

Answer 2

The lesser of $5,500 ($11,000 for MFJ) ($6,500 for age 50 and over) or compensation.

Question 3

Are gambling losses deductible?

Answer 3

Yes, to the extent of gambling winnings/gains.

Question 4

Are gambling losses subject to the 2% of AGI floor?

Answer 4

No

Question 5

What are the standard deduction or itemized deduction totals added to in order to arrive at the total taxable income?

Answer 5

The personal exemption

Question 6

An individual whose adjusted gross income exceeds $313,800 ($156,900 if married filing separately) must reduce the aggregate of itemized deductions by what amount?

Answer 6

The lesser of 80% of otherwise allowable itemized deductions or 3% of the excess. The overall limitation, however, does not apply to deductions for medical expenses, investment interest expenses, casualty or theft losses, or gambling losses (to the extent of gains).

Question 7

What % of AGI are charitable deductions at FMV of capital assets to a church limited to?

Answer 7

30% of AGI

Question 8

What is the overall limitation on charitable contributions, without regard to any net operating loss (NOL) carry back?

Answer 8

50% of AGI

Question 9

Are medical insurance premiums deducted from Gross Income to get to AGI or AGI to get to Taxable Income?

Answer 9

As an itemized deduction to get to Taxable Income and only premiums paid for medical insurance that provides for reimbursement of medical care expenses are deductible.

Question 10

How are self-employment taxes deducted and what % of them is deductible?

Answer 10

As an adjustment to Gross Income to get to AGI and 50% of SE tax is deductible.

Question 11

What % of AGI are casualty losses/theft subject to?

Answer 11

Deductions claimed must be in excess of 10% of AGI.

Question 12

The IRC allows the deduction of a limited amount of investment interest as an itemized deduction. What is this limit?

Answer 12

The limit is to the extent of net investment income.

Question 13

How are additions to a property for a qualified medical expenses calculated for deduction purposes?

Answer 13

The excess of the cost of a permanent improvement over the increase in value of the property is a deductible medical expense. Construction of handicap entrance/exit ramps, installation of elevators, or widening of doorways also qualify.

Question 14

Are personal car loan expenses deductible?

Answer 14

No, the general rule is that no personal expenses may be deducted. Personal expenses include interest on credit card debt, revolving charge accounts and lines of credit, car loans, medical fees, and premiums, etc

Question 15

May charitable contributions that exceed limitations be carried forward and deducted in the next 5 tax years?

Answer 15

Yes, the overall limitation on charitable deductions is 50% of AGI. Any donations that exceed this limitation can be carried forward and deducted potentially in the next 5 tax years.

Question 16

Are commuting costs deductible?

Answer 16

No, they are nondeductible.

Question 17

Are education expenses deductible?

Answer 17

Education expenses may be deductible only if incurred to maintain or improve skills that are required in the taxpayer’s current employment context, or if incurred to meet legal requirements or employer requirements. In contrast, the expense of education to enter a trade, business, or profession or to meet the minimum education requirements is not deductible, even if state law requires the education.

Question 18

May an individual deduct moving expenses related to a new job and, if so, how are they deducted?

Answer 18

An employee may deduct as an above-the-line deduction in arriving at adjusted gross income the reasonable expenses of moving himself and his family from one location to another, provided that the move is related to the commencement of work in a new location. To be eligible for the deduction, the new place of work must be at least 50 miles farther from the taxpayer’s old residence than his old residence was from his old place of work. Also, the taxpayer must be employed full-time for at least 39 weeks during the 12-month period following the move

Question 19

Is an employee business expense subject to the 2% of AGI floor?

Answer 19

Yes, it is.

Question 20

What % of AGI are contributions of long-term capital gain property to private non operating foundations limited to?

Answer 20

Contributions of long-term capital gain property to private nonoperating foundations are limited to 20% of the taxpayer’s AGI.

Question 21

What % of AGI are contributions to private operating foundations limited to?

Answer 21

Generally, contributions to private operating foundations are limited to 30% of the taxpayer’s AGI

Question 22

Is the value of time and services donated to a charity deductible?

Answer 22

No