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Flashcards in Federal Taxation: Deductions Deck (14):

What is the maximum deduction for interest on student loans?



13 Deductions for AGI

1. Alimony payments
2. 1/2 of SE taxes paid by self-employed
3. Medical insurance premiums
4. Moving expenses
5. Student loan interest
6. HSA contributions
7. IRA contributions
8. Attorney fees for discrimination suit
9. Penalty for early withdrawal of savings
10. Domestic production activities deduction
11. Qualified higher education expenses
12. Repayment of jury fees and other deductions
13. Certain educator expenses


What moving expenses are deductible? (2)

What are not deductible.

1. Moving household goods
2. Lodging

Meals are not deductible during move, neither are temporary living expenses.


6 Requirements for Alimony to be deductible

1. Do not file a joint return
2. Pay in cash
3. Divorce decree does not say payment is not alimony
4. Not members of same household
5. No obligation to make payment after death
6. Not treated a child support


8 Medical Items Deductible from AGI

1. Dental, medical, and hospital care
2. Prescription drugs
3. Equipment such as wheelchairs, eyeglasses, crutches, hearing aides, contacts
4. Transportation for medical care
5. Qualified long-term care expenses and insurance
6. Alcohol and drug rehabilitation
7. Weight-reduction programs as part of medical treatment
8. Automobile ($0.23/mile in 2014); Lodging up to $50/night


Formula for medical expenses

+ Qualified medical expenses
- Reimbursement from insurance
- 10% AGI (7.5% if >65)
= Deductible medical expenses


6 Types of personal deductions that can be itemized

1. Medical expenses
2. Interest
3. Taxes
4. Charitable contributions
5. Casualty losses
6. Miscellaneous deductions


What taxes and fees are deductible?

What taxes and fees are not deductible?

State and local income and property taxes (based upon value) are deductible in the year they are paid.

State and local fees and federal income taxes are not deductible.


Formula for personal casualty loss

+ Lower of decline in either FMV or AB
- Insurance reimbursement
- Casualty floor
- 10% x AGI
= Casualty loss deduction


2% Miscellaneous itemized deductions

Aggregate allowed to the extent they exceed 2% of AGI
1. Un-reimbursed employee expenses, or reimbursed, but not under accountable plan
2. Tax planning and return preparation expenses
3. Investment expenses: a) fees paid for investment advise, b) safe deposit box rental fees
4. Home office expense of an employee
5. Hobby expenses


3 Characteristics of charitable contributions

1. Made to qualified organization
2. Cash or property, but not services
3. Written records required


2 Casualty loss limitations

1. $100 per occurance
2. Total annual losses reduced by 10% AGI


4 Charitable contribution limits

1. 50% AGI
2. LTCG limit 30% of AGI to "A" charities
3. LTCG limit 20% of AGI to "B" charities
4. 5 year carryforward


Limit that passive activity losses can offset nonpassive income

$25,000 passive activity losses are allowed to offset non-passive income.

This $25K is reduced by 50% of the amount of income above $100,000