tailieunhanh - Lecture Fundamentals of taxation 2014 (7/e) - Chapter 5: Itemized deductions

When you have completed this chapter, you should understand the following learning objectives: Describe the deductibility and reporting of medical expenses, be able to explain the state and local tax deductions, apply the tax rules associated with the interest deduction, explain the deductibility and reporting of charitable contributions,. | Chapter 5 Itemized Deductions “A person should be taxed according to his means” --The Talmud 1 Chapter 5 - Itemized Deductions LO #1 Deductible Medical Expenses Medical expenses are normally deductible to the extent that they now exceed 10% of AGI. Taxpayers can deduct an itemized deduction for medical expenses (net of insurance proceeds) for themselves, their spouse, and dependents. The qualifying relationship must exist on the date expenses are incurred or paid. For taxpayers > age 65, the old threshold of applies for the years 2013-2016. 5-2 2 Taxpayers can deduct an itemized deduction for medical expenses, net of insurance proceeds, for themselves, their spouse, and dependents. Only the amount in excess of 10 percent of adjusted gross income is deductible. For taxpayers > age 65, the old threshold of applies for the years 2013-2016 LO #1 Deductible Medical Expenses Taxpayers may deduct just about all medical expenses that are doctor-prescribed. Expenses related to the maintenance of general health are usually not deductible. A deduction may be claimed only for medical expenses actually paid during the taxable year, regardless of when the care was provided and regardless of the taxpayer’s method of accounting. 5-3 3 In most instances, medical expenses are relatively straightforward and include all costs for licensed medical treatment. Ambiguity occurs when expenditures for personal, living, and family purposes, which are generally not deductible, are incidental to medical care, which generally is deductible. A deduction may be claimed only for medical expenses actually paid during the taxable year, regardless of when the care was provided and regardless of the taxpayer’s method of accounting. LO #1 Deductible Medical Expenses Medical capital expenditures are deductible only to the extent that the expenditure exceeds the increase in FMV of the property. Transportation costs for medical purposes are deductible and could include such items as cab, bus, or | Chapter 5 Itemized Deductions “A person should be taxed according to his means” --The Talmud 1 Chapter 5 - Itemized Deductions LO #1 Deductible Medical Expenses Medical expenses are normally deductible to the extent that they now exceed 10% of AGI. Taxpayers can deduct an itemized deduction for medical expenses (net of insurance proceeds) for themselves, their spouse, and dependents. The qualifying relationship must exist on the date expenses are incurred or paid. For taxpayers > age 65, the old threshold of applies for the years 2013-2016. 5-2 2 Taxpayers can deduct an itemized deduction for medical expenses, net of insurance proceeds, for themselves, their spouse, and dependents. Only the amount in excess of 10 percent of adjusted gross income is deductible. For taxpayers > age 65, the old threshold of applies for the years 2013-2016 LO #1 Deductible Medical Expenses Taxpayers may deduct just about all medical expenses that are doctor-prescribed. Expenses related to the .