Chapter 617 8 Deductions TB - Chapter 617 8 Deductions...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 617 8 Deductions: Itemized Deductions TRUE-FALSE QUESTIONS--CHAPTER 8 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. Itemized deductions only reduce taxable income if the taxpayer's itemized deductions exceed the standard deduction amount. Individual taxpayers are allowed to deduct unreimbursed medical and dental expenses paid during the year for themselves, their spouse, and dependents. Medical expenses recovered after being claimed as a deduction in the previous year must be included in income in the year of recovery to the extent that the deduction decreased taxable income in the year they were deducted. An individual has an insurance policy that will pay $500 a week for 100 weeks in the event of hospitalization. The premium on this policy qualifies as a deductible medical expense subject to the applicable limitations. Vitamin pills taken daily for general health are a qualified medical expense. To alleviate an obesity problem, a doctor puts a patient on a special diet. The total cost of the patient's food for the special diet is a deductible medical expense. Fees paid to chiropractors may be a deductible medical expense. Payments received under an accident insurance policy and designated for hospitalization or medical care will reduce the amount deductible as medical expenses. Medical expenses may be claimed only for persons who qualify as an exemption on your return. Premiums paid for insurance policies providing reimbursement for the accidental loss of life, limb or sight are deductible as medical expenses. An individual is allowed a medical deduction set at a standard rate of 55 cents per mile for the use of a car for medical purposes in lieu of a deduction based on the actual operating expenses for gas, oil, etc. Estate taxes, gift taxes, and state inheritance taxes are deductible for federal income tax purposes. A taxpayer may elect to capitalize certain annual taxes, mortgage interest, and deductible carrying charges on unimproved and unproductive real property. A taxpayer may deduct the sales tax paid on the purchase of a boat. Ad valorem personal property taxes are allowed as an itemized deduction. An ad valorem tax is a tax in proportion to the value of personal property. All state and local taxes are deductible for federal income tax purposes. Federal income taxes paid are deductible as an itemized deduction on an individual's federal income tax return. Charges, sometimes known as "points," paid by a borrower to a lender are generally deductible as interest over the life of the loan if they are compensation solely for the use or forbearance of money. Points paid on the loan for the purchase of a new home are not deductible on an individual's tax return. Interest on a loan, the proceeds of which are borrowed to purchase tax- exempt securities, is not deductible. Investment interest may be deducted only to the extent of net investment income; interest that cannot be deducted because of this limitation is
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/03/2011 for the course ACCOUNTING 3550 taught by Professor Comb during the Spring '11 term at University of Texas at Dallas, Richardson.

Page1 / 8

Chapter 617 8 Deductions TB - Chapter 617 8 Deductions...

This preview shows document pages 1 - 2. Sign up to view the full document.

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