Chapter 9

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Unformatted text preview: Income Taxation: Chapter 9 Income 1 Itemized Deductions x Personal itemized deductions are deductible Personal on Form 1040, Schedule A, only if y they exceed the standard deduction or, y the taxpayer is not eligible for the standard the deduction x Itemized deductions are taken FROM AGI Itemized FROM 2 Itemized Deductions x Form 1040, Schedule A classifications for Form deductions deductions y Medical Expenses y Taxes Paid y Interest Expense y Charitable Contributions y Casualty & Theft Losses y Miscellaneous Deductions 3 Medical Expenses Who may deduct medical expenses? x A TP may deduct eligible medical expenses paid for TP him/herself, spouse, and dependents him/herself, Gross income and joint return tests are waived for determining dependency status x Medical expenses for children of divorced parents are Medical deductible by the parent who pays for them, regardless of who has the dependency exemption of x Eligible expenses deductible only to extent they exceed Eligible 7 1/2% of AGI (10% of AGI for the AMT) 1/2% 4 Eligible Medical Expenses Deductible medical expenses include any amount paid for: x Diagnosis, cure, mitigation, treatment or prevention of Diagnosis, disease, or for the purpose of affecting any structure or function of the body x Transportation for and essential to the above Transportation x Insurance which covers the above No deductions for: x Illegal operations or treatment x Cosmetic surgery except reconstructive surgery for Cosm...
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