Week5.Lecture.Chapter10

Week5.Lecture.Chapter10 - Chapter 10 DeductionsandLosses:

Info iconThis preview shows pages 1–11. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 10 Deductions and Losses: Certain Itemized Deductions
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
C10 - C10 - 2 Itemized Deductions Personal expenditures that are deductible FROM AGI as itemized deductions include: Medical expenses (above 7.5% AGI) Taxes Interest Charitable Contributions (50% AGI Max) Miscellaneous itemized deductions (above 2% AGI) Casualty or Theft Losses (above 10% AGI)
Background image of page 2
C10 - C10 - 3 Medical Expenses (slide 1 of 3) Expenditures for the diagnosis, cure, mitigation, treatment, prevention of disease of the taxpayer, spouse, or dependents Includes prescription drugs and insulin Does not include (a) Elective cosmetic surgery, (b) general health items or (c) nonprescription drugs
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
C10 - C10 - 4 Medical Expenses (slide 2 of 3) Medical expenses are deductible to the extent unreimbursed medical expenses, in total, exceed 7.5% of AGI Calculation: Total Expenses LESS Insurance Reimbursement LESS 7.5% of AGI EQUALS Medical Expense Deduction
Background image of page 4
C10 - C10 - 5 Medical Expenses (slide 3 of 3) Example of medical expense deduction limitation: Amy has AGI of $10,000 and medical expenses of $1,000 Amy’s medical expense deduction = $250 [$1,000 – ($10,000 × 7.5%)]
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
C10 - C10 - 6 Capital Medical Expenditures Fully deductible if: Related to sick person personally (doesn't improve property/home) Partially deductible if: Expenditure improves value of property (deductible only to extent cost exceeds increase in value) Exception: removal of structural barriers to home of handicapped are deemed to add no value to home
Background image of page 6
C10 - C10 - 7 Medical Care of Spouse and Dependents Taxpayer may deduct cost of medical care for spouse and dependents Dependents need not meet gross income or joint return tests Medical expenses of children of divorced parents can be deducted by non-custodial parent even though child is dependent of custodial parent
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
C10 - C10 - 8 Health Insurance Premiums Premiums paid for medical care insurance are deductible medical expenses For self-employed, 100% of insurance premiums are deductible FOR AGI
Background image of page 8
C10 - C10 - 9 Reimbursement by Medical Insurance If reimbursed in same year as expense paid: Reimbursement offsets medical expense Amount deductible is excess of expenses over reimbursement If reimbursed in the year after medical expenses were paid: Reimbursement is income only to extent medical deduction was taken by taxpayer (tax benefit rule)
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
C10 - C10 - 10 10 Example of Medical Reimbursements (slide 1 of 2) In 2007, taxpayer paid medical expenses =
Background image of page 10
Image of page 11
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/21/2010 for the course MANAGEMENT 127a taught by Professor Gadner during the Spring '08 term at UCLA.

Page1 / 33

Week5.Lecture.Chapter10 - Chapter 10 DeductionsandLosses:

This preview shows document pages 1 - 11. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online