Itemized Deductions

Posted on October 20, 2018 by G & R Tax Services

MEDICAL AND DENTAL EXPENSES

Deductible expenses include:

Prescription medicines and drugs (including insulin)

Medical, dental, and nursing care, including amounts paid for UN-reimbersed qualified long-term care services

Medical and hospital insurance premiums, including amounts paid for eligible long-term care (subject to certain limitations based on the insured person’s age)

Prescription eyeglasses, hearing aids, crutches, wheelchairs, and guide dogs

Certain home improvements made for medical purposes or to make the home suitable for a disabled person

Nondeductible expenses include:

Life insurance policy premiums

Nursing care for a healthy baby

Nonprescription drugs of medicines

Weight-loss programs (unless recommended by doctor)

Funeral, burial, or cremation costs

Unnecessary cosmetic surgery (surgery that does not correct congenital abnormality or an abnormality caused by injury or disease)

TAXES

Deductible Taxes:

State, Local and Foreign Income Taxes – hose taxes include tax withheld, estimated payments and tax paid for an earlier year

Real Estate Taxes – State, Local or Foreign taxes on real property, such as the taxpayer’s house or land, are deductible. Real estate taxes are deductible when paid. If taxes are paid with a mortgage payment and held in escrow, do not deduct the taxes until they are paid back by the bank or the mortgage lender.

Personal Property – Tax-Taxes that state and local governments charge on the value of personal property is deductible. A portion of the cost of personal vehicle registration may fall in this category

Nondeductible Taxes:

Federal taxes – income tax, social security (FICA), Medicare, railroad retirement tax, and excise taxes or customs duties

Water and sewer taxes

State, local and federal taxes on gasoline, diesel, and other motor fuels used in a non-business vehicle.

Utility taxes – gas, electricity, etc.

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INTEREST

Home Mortgage Interest

A taxpayer can fully deduct points in the year he or she pays them only if all of the following conditions apply:

The taxpayer itemizes deductions

The loan is used to buy or improve a main home (a main home is the one the taxpayer lives in most of the time)

The loan is secured by that main home

The loan meets the requirements for deductible mortgage interest, discussed earlier under Home Mortgage Interest

Paying points is an established business practice in the area where the loan was made

Non-deductible Interest:

Loan fees; aid for services necessary to get a loan (closing cost, down payment)

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CONTRIBUTIONS

Qualifying Organizations:

Churches, synagogues, temples, mosques, Salvation Army, Red Cross, CARE, United Way, Boy & Girl Scouts, World Wildlife Fund, etc.

Nonprofit schools and hospitals

Non-qualifying Organizations:

Business organizations, such as the Chamber of Commerce

Political organizations and candidates

Homeowner’s associations

Deductible Items:

Money gifts

Dues, fees, and assessments paid to qualified organizations above the value of the benefits received (not country clubs or other social organizations)

Fair market value of used clothing, furniture, etc.

Nondeductible Items:

Cost of raffle, bingo, or lottery tickets

Blood donated to a blood bank or the Red Cross

Direct contributions to an individual

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MISCELLANEOUS ITEMIZED DEDUCTIONS

Deductible Items:

Union dues and fees

Uniforms not adaptable to general use

Professional books, magazines, journals, etc.

Employment-related educational expenses

Expenses of looking for a new job

Investments counsel fees

Tax counsel and assistance

Safe deposit box rental for investment documents

Acupuncture

Insulin

Air conditioner for allergies

Nursing fees

Contacts, including supplies

Chiropractic services

Cosmetic surgery for deformity relating to a congenital abnormality, accident, or disease

Birth control prescribed by a doctor

Investment interest

Casualty losses

Theft losses

Work clothes not suitable for normal wear

Occupational licensing fees

Travel expenses relating to managing investments

IRA administration fees

Fees to collect interest or dividends

Trust administration fees

Impairment related work expenses

Nondeductible Items:

Burial or funeral expenses

Wedding expenses

Home repairs, insurance and rent

Insurance premiums (except medical insurance premiums)

Losses from the sale of a taxpayer’s home, furniture, personal care, etc.

Personal legal expenses

Commuting expenses to and from work