The profit motive distinguishes "business" activities from "personal" activities.
All business expense deductions are claimed above the line.
All investment expenses are itemized deductions.
Rental or royalty expenses are deductible "for" AGI.
To be deductible, business expenses must be directly related to a business activity.
The phrase "ordinary and necessary" means that an expense must be appropriate and helpful for
generating a profit.
All reasonable moving expenses are deductible if the move is a minimum of 35 miles in distance.
To deduct a moving expense, the taxpayer must be employed or self employed for a specific amount of
time after the move.
Self employed taxpayers can deduct the cost of health insurance as long as they do not actually participate
in their spouses' employer-provided health plan.
10. Self employed taxpayers can choose between claiming a deduction or a credit for half of self employment
11. An individual who forfeits a penalty for prematurely withdrawing a certificate of deposit (CD) is allowed
to net the penalty against the interest income from the CD.
12. Qualified education expenses for purposes of the deduction of interest on educational loans are expenses
paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent to attend a post-
secondary institution of higher education.
13. The definition of qualifying expenses is more restrictive for the qualified educational expense deduction
than it is for the education loan interest expense deduction.
14. The medical expense deduction is designed to provide relief for doctors and medical practitioners.
15. Deductible medical expenses include payments to medical care
such as doctors, dentists, and
nurses and medical care
such as hospitals.
16. Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may
deduct the cost of travel.
17. The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical
expenses paid during the year
by five percent of the taxpayer's AGI.
18. The itemized deduction for taxes includes all types of state, local, and foreign taxes.
19. Taxpayers may elect to deduct state and local sales taxes
deducting state and local income
20. Taxpayers are allowed to deduct mortgage interest on up to $1,000,000 of acquisition debt for their
qualified residence and on up to $500,000 of home-equity debt.
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