Day _13 ACIS3314 Spring 2011 Itemized Deductions

Day _13 ACIS3314 Spring 2011 Itemized Deductions - ACIS...

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ACIS 3314, Cloyd, Day 13 1 1 Deductions 2: Itemized Deductions ACIS 3314 Tax Impact on Decisions 2 Tasks for Today • Itemized Deductions – Medical – Interest Expense – Taxes – Charitable Contributions – Miscellaneous Itemized Deductions – Overall limitation on high AGI taxpayers • Phase-out of Personal & Dependency Exemptions 3
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ACIS 3314, Cloyd, Day 13 2 Medical Expenses Insurance premiums & out-of-pocket medical Qualifying costs include payments for medical transportation, care, prevention, diagnosis or cure, not reimbursed by health insurance and not paid through a ―flexible spending account‖ 6-4 Medical Expenses • Medical Expenses Deduction Limitation – Limited to the amount of unreimbursed qualifying medical expenses paid during the year which, in the aggregate, exceed 7.5% of AGI 6-5 6 Interest Expense—Overview Categories of Interest Expense Trade or Business Passive Activity Tax-exempt Investments Consumer Interest Qualified Residence Interest Investment Interest Tax Treatment Deductible for AGI Deductible for AGI, but §469 Not deductible per §265 Not deductible Itemized but limited Itemized but limited Money is fungible, so how is interest allocated to categories? Interest tracing based on use of loan proceeds Except QRI is based on source of loan proceeds.
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ACIS 3314, Cloyd, Day 13 3 7 Interest Expense—QRI Qualified Residence Interest 1. Acquisition Indebtedness (AI)—Up to $1,000,000 of debt… Incurred in acquiring, constructing, or substantially improving any qualified residence of the taxpayer AND
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Day _13 ACIS3314 Spring 2011 Itemized Deductions - ACIS...

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