Question or Topic

Bob Parrish CPA, P.C.

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The Question:
	What are the deductions for Itemized Deductions? A typical household will spend money for the items shown in this article. If you spend money for --- Health care and medical State or local taxes Purchase or buying a home Charity Education Job expenses Storm - Accident - or Theft losses Dependent Care You contributed to a retirement plan You are a teacher There are many others - read this article or contact Bob Parrish CPA for a conference
Objectives
	Look at a checklist for Itemized Deductions -
Related Articles

The Answer

Medical, Dental and Other Healthcare Expenses
	Archer MSA Deduction Medical and Dental expenses are generally deductible to the extent they exceed 7.5% of your income. Some of the more common expenses: hospital fees medical devices doctor/dentist fees prescription meals/lodging related to hospital stays cost of lead based paint removal organ donation psychiatric care legal adoption insurance premiums operations cost of guide dogs longterm care ins prem. cost of smoking cessation program physician diet/health programs life-care fees for medical treatment prescribed birth control pills special life items (glasses, limbs, dentures, wheelchair, hearing aid, contacts, etc.) transportation drug/alcohol treatment school/home for disabled handicap access devices for disabled Special Items and Equipment: Your medical expenses can include payments for any of the following items. Artificial limbs, eyeglasses, and hearing aids. The part of the cost of Braille books and magazines that is more than the price of regular printed editions. Cost and repair of special telephone equipment for hearing-impaired persons. Cost of equipment that displays the audio part of television programs as subtitles for hearing-impaired persons. Cost and maintenance of a wheelchair or autoette. Cost and care of a guide dog or other animal aiding a person with a disability. A therapist or other person who gives "patterning" exercises to a mentally retarded child. Special schools, if the main reason for using the school is its resources for relieving a mental or physical disability. This includes the cost of teaching and the cost of remedial language training to correct a condition caused by a birth defect. Premiums for qualified long-term care insurance, up to certain amounts. Improvements to your home that do not increase its value if the main purpose is medical care. An example is constructing entrance or exit ramps to your home. Impairment-Related Work Expenses If you are an employee and have a physical or mental disability that functionally limits your employment, or a physical or mental impairment that substantially limits one or more of your major life activities, you may be able to claim impairment-related work expenses. These are your allowable business expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to work. If you have impairment-related work expenses, complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses, and attach it to your Form 1040. Employee business expenses are subject to a 2%-of-adjusted-gross-income limit. However, impairment-related work expenses are not subject to the 2% limit. Abortion Acupuncture Alcoholism - You can include amounts you pay for an inpatient's treatment at a therapeutic center for alcohol addiction. This includes meals and lodging provided by the center during treatment. Ambulance Artificial limb Artificial teeth Birth control pills Braille books and magazines - You can include the part of the cost of Braille books and magazines for use by a visually-impaired person that is more than the price for regular printed editions. Capital expenses- You can include in medical expenses amounts you pay for special equipment installed in your home, or for improvements, if their main purpose is medical care for you, your spouse, or a dependent. Car - You can include in medical expenses the cost of special hand controls and other special equipment installed in a car for the use of a person with a disability. Chiropractors Christian Science practitioners Contact lenses - You can also include the cost of equipment and materials required for using contact lenses, such as saline solution and enzyme cleaner. Dental treatment Drug addiction - Same deductions as for alcoholism. Eyeglasses Guide dog or other animal - You can include in medical expenses the cost of a guide dog or other animal to be used by a visually-impaired or hearing-impaired person. Hearing aids - You can include in medical expenses the cost of a hearing aid and the batteries you buy to operate it. Hospital services Insurance premiums - Medicare B is a supplemental medical insurance. Premiums you pay for Medicare B are a medical expense. You cannot include premiums you pay for: Life insurance policies, Policies providing payment for loss of earnings, Policies for loss of life, limb, sight, etc., Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury, or the part of your car insurance premiums that provides medical insurance coverage for all persons injured in or by your car because the part of the premium for you, your spouse, and your dependents is not stated separately from the part of the premium for medical care for others. Laboratory fees Lead-based paint removal - You can include in medical expenses the cost of removing lead-based paints from surfaces in your home to prevent a child who has or has had lead poisoning from eating the paint. These surfaces must be in poor repair (peeling or cracking) or within the child's reach. The cost of repainting the scraped area is not a medical expense. Learning disability - You can include in medical expenses tuition fees you pay to a special school for a child who has severe learning disabilities caused by mental or physical impairments, including nervous system disorders. Your doctor must recommend that the child attend the school. Legal fees - You can include in medical expenses legal fees you paid that are necessary to authorize treatment for mental illness. Lifetime care— advance payments - You can include in medical expenses a part of a life-care fee or "founder's fee" you pay under an agreement with a retirement home. The part of the payment you include is the amount properly allocable to medical care. Lodging - The amount you include in medical expenses cannot exceed $50 for each night for each person. Lodging is included for a person for whom transportation expenses are a medical expense because that person is traveling with the person receiving the medical care. Medicines - You can include in medical expenses amounts you pay for prescribed medicines and drugs. Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed. Nursing home - This includes the cost of meals and lodging in the home if the main reason for being there is to get medical care. Nursing services - You can include social security tax, FUTA, Medicare tax, and state employment taxes you pay for a nurse, attendant, or other person who provides medical care as a medical expense. Do not include the cost of nursing services for a normal, healthy baby. Operations Oxygen Psychiatric care Psychoanalysis Schools and education, special - You can include in medical expenses payments to a special school for a mentally impaired or physically disabled person if the main reason for using the school is its resources for relieving the disability. Sterilization Telephone - You can include the cost and repair of special telephone equipment that lets a hearing-impaired person communicate over a regular telephone. Television - You can include in medical expenses the cost of equipment that displays the audio part of television programs as subtitles for hearing-impaired persons. Therapy Transplants Transportation - Instead of deducting actual car expenses, you can deduct 10 cents a mile for use of your car for medical reasons. Add the cost of tolls and parking to this amount. Wheelchair X-ray fees Doctor & dentist fees Prescription medicines Insulin Acupuncture Air conditioner necessary for allergies or respiratory ailments Nursing fees Hospital fees Contacts, including supplies used with contacts such as saline and enzyme cleaner Chiropractic services Medical, dental, and long-term care insurance Hearing aids Dentures Guide dog for physically disabled persons Cosmetic surgery for deformity relating to a congenital abnormality, accident or disease Special equipment installed in home to provide medical benefit Birth control prescribed by a doctor Prescription medicines Insulin Acupuncture Air Conditioner necessary for allergies or respiratory ailments Nursing fees Hospital fees Contacts, including supplies used with contacts such as saline and enzyme cleaner Chiropractic services Medical, dental, and long-term care insurance Hearing aids Dentures Guide dog for physically disabled persons Cosmetic surgery for deformity relating to a congenital abnormality, accident, or disease Special equipment installed in home to provide a medical benefit Birth control prescribed by a doctor
Taxes You Pay
	The taxes you paid during the year are usually 100% deductible if they are the following types of taxes- State Taxes Local Taxes Property Taxes Payments to mandatory state funds Foreign income taxes Real Estate Taxes Value based vehicle license or registration fee Stock transfer tax and Other
Interest Expenses
	home mortgage interest 2nd home mortgage interest home equity loan interest interest on special assessments (as real estate tax) business interest investment interest (broker margin interest) “points” paid
Charity - Money, Gifts and "Out of Pocket" Expenses
	Both cash and property are generally deductible if donated to qualified organizations. Qualified organizations include: churches non-profit schools non-profit hospitals public parks boy & girl scouts war/veterans groups agencies such as: Red Cross, Salvation Army, Goodwill, CARE, United Way etc. YMCA/YWCA Tax Killer - Make sure you also keep track of your mileage to and from the charity. It is also deductible. Cash Contributions Churches/synagogues Nonprofit schools, Colleges, and Hospitals Public parks improvements & construction United Fund/Way (payroll deduction) Scouts, etc. Association or society to find disease cures Membership in charitable organizations Veterans of Foreign Wars and other Tickets & merchandise purchased (for fund raiser of charitable organizations) excess cost over fair market value Out-of-Pocket expenses Scout leader uniform, etc. Exchange student (transportation and incidentals) up to $50.00 per month Supporting a foster child Charity-sponsored conventions Charitable travel @ 12 cents/mile for Charitable Organizations Other non-cash (The most overlooked itemized deduction) Gift of property, if over $500 complete form 8283, Clothing, Furniture, Etc. (Discount your cost 50 to 75% for deduction amount) Medical Equipment and Supplies donated to charity
Damages and Losses Because of Fire, Storm, Accident, Theft and Other Casualties
	Casualty and Theft losses are generally deductible if - the circumstance exceeds 10% of your adjusted gross income, each event exceeds $100 - AND it was not reimbursed by insurance Examples: fire theft natural loss: tornado, hurricane, flood, etc. car accident vandalism other accidents


Miscellaneous Expenses
	Most miscellaneous deductions are only deductible to the extent they exceed 2% of your adjusted gross income. work uniforms job hunting expenses safe deposit box cost tax prep fees employee business expenses hobby exp. to offset gains 50% of business related meals; entertainment repayments of Social Security investment related expenses in-home office expenses IRA/KEOGH administration fees business use depreciation certain legal fees trust administration fees job required medical exam job required education expenses Other An uncollectible debt (the debt must be a valid one that you have actually made serious attempts to collect). Disaster losses not reimbursed by insurance. Job-hunting travel and telephone expenses. Employment agency and job counseling fees. Costs for resume preparation. Union or professional association dues. Specialized work clothing or small tools used at work. Points paid by you on a new home loan. Points paid by a seller on your behalf. Points paid on refinancing your home mortgage (deductible pro rata over the life of the loan). Remaining undeducted points on a first refinancing when you refinance a second time. Your actual expenses or 14 cents a mile for driving in doing charitable work. Gambling losses, but only to the extent of your winnings. Tax return fees Safe deposit box used to store investments Work clothes not suitable for normal wear Expenses relating to tax planning Expenses relating to investments Professional dues Union dues Certain unreimbursed employee expenses Subscriptions to professional magazines Continuing professional education Occupational licensing fees Travel expenses relating to managing investments IRA administration fees College professor’s research expenses Job hunting cost Medical exams required by employer Depreciation on equipment used for your job Fees to collect interest or dividends Legal fees for collecting taxable income or keeping a job Trust administration fees Misc Itemized Deducts NOT subject to the 2% floor Amortizable premium on taxable bonds Casualty and theft losses from income-producing property Federal estate tax on income in respect of a decedent Gambling losses up to the amount of gambling winnings Impairment-related work expenses of persons with disabilities Repayments of more than $3,000 under a claim of right Unrecovered investment in an annuity gambling losses to offset gains handicapped job related expenses un-recovered annuity costs repayments of income
Other Typical Individual or Family Expenses That May Offer Tax Write-Off's or Tax Credits
Expenses For Education or Courses
	Student Loan Interest Paid Tuition and Fees My university required each incoming freshman to come to school with their own computer. Is there any way to deduct the cost of the computer from my tax liability? The cost of a personal computer is generally a personal expense that is not deductible. However, if the school bills everyone, as a condition of attendance or enrollment for proprietory computer devices and/or softwares available no where else, then this may be a quality expense towards either the Lifetime Learning Credit or Hope Credit. What educational expenses are deductible? You may be able to deduct work-related educational expenses as an itemized deduction on Schedule A of Form 1040, line 20. To be deductible, your expenses must be for education that: Maintains or improves skills required in your present job; or Serves a business purpose and is required by your employer, or by law or regulations, to keep your present salary, status, or job. What are types of educational expenses? Deductible educational expenses include amounts spent for tuition, books, supplies, laboratory fees, and similar items. They also include the cost of correspondence courses, as well as formal training and research you do as part of an educational program. Transportation and travel expenses to attend qualified educational activities may also be deductible. Can I deduct the cost of classes I need for work? In some cases, you may be able to deduct the cost of classes you need for work. This deduction, however, would be subject to the 2 percent of AGI floor, along with most other miscellaneous deductions you list on your Schedule A. To be deductible, your expenses must be for education that: (1) Maintains or improves skills required in your present job, or (2) Serves a business purpose and is required by your employer, or by law to keep your present salary, status, or job. However, these same expenses are not deductible if: (1) The education is required to meet the minimum educational requirements of your job, or (2) The education is part of a program that will lead to qualifying you in a new trade or business. Educational expenses, related to your present work, that are incurred during periods of temporary absence from your job may also be deductible provided you return to the same job or same type of work. Generally, absence from work for one year or less is considered temporary. Am I eligible to claim both my job education expenses (minus 2% of AGI) and the Lifetime Learning Credit on my taxes? If you are eligible to deduct educational expenses and are also eligible for the lifetime learning credit, then it is possible to claim both, as long as you do NOT use the same educational expenses to claim both benefits. Your expenses must be divided between the two. This is sometimes desireable because a qualifying expense for one benefit may not be a qualifying expense for the other tax benefit. I am employed as a Registered Nurse and am currently taking classes to be an Advanced Practitioner of Nursing (which is a master's Degree in Nursing). My classes are not required by my employer but they do increase my knowledge to do my job well. I will probably continue working for the same employer when I graduate. Can I claim the cost of tuition, books, travel to the university, etc., as an unreimbursed business expense? You may be able to claim this deduction as long as the position of Advanced Practitioner of Nursing does not constitute a change of trade or business. If the education merely maintains or improves the skills required in your employment and you merely have a change of duties, then, your expenses would likely be deductible as job education expenses, subject to certain limitations. However, you should consider the relative merits of taking a tax deduction versus taking a tax credit consider the relative merits of taking a tax deduction or taking a tax credit (Lifetime Learning Credit) for the same expense. I took an accounting course in order to keep my salary on my current job. My employer did not reimburse me for the expenses. Can I take a deduction on my tax return for the cost of the course? If you itemize deductions you may be able to deduct work-related educational expenses as a job expenses which, when combined with your other miscellaneous deductions, are subject to the 2% of adjusted gross income limitation on Form 1040, SCHEDULE A. To be deductible, your expenses must be for education that: Maintains or improves skills required in your present job, or Serves a business purpose and is required by your employer, or by law, to keep your present salary, status, or job. Your expenses are not deductible if the education is required to meet the minimum educational requirements of your job or is part of a program that will lead to qualifying you in a new trade or business. My employer is including my graduate school tuition reimbursements on my W-2. Where do I claim these education expenses on my Form 1040? If your graduate school tuition is deductible and the reimbursements are included in your income as wages, then you may take the expense as a miscellaneous itemized education on Form 1040, SCHEDULE A, Itemized Deductions, line 20. You may also need to attachForm 2106, Employee Business Expenses. Is the exclusion from income of up to $5,250 of employer-provided educational assistance under a qualified program still available? Yes, but for 2001, it applies only to benefits you receive for undergraduate courses. The exclusion does not currently apply to graduate-level courses. However, with the year 2002, employer-provided educational assistance will include graduate level courses Self-employed individuals include educational expenses as deductions on Form 1040 SCHEDULE C, Profit or Loss From Business.
Moving Expenses
	Transportation, Storage and packing of household goods & other Personal Effects Travel & lodging (Auto mileage _____x 10 cents)
Job - Work - Employment or Occupation Expenses
	You are a teacher - School tuition for courses you take Materials used in the classroom such as - books, supplies, equipment, computer equipment, software and services. Unreimbursed employee expense 2. Agent, agency and employment fees 3. Cleaning and laundry service when traveling on business 4. Education expense to maintain job 5. Tuition and lab fees, equipment, books, & supplies, travel between work & school and board & lodging if away from home 6. Gifts (business related under $25 each) 7. Impairment-Related work expense 8. Job hunting expenses: resume, travel, phone, postage, letters, consultants, career planners 9. Newspaper & Trade Magazines 10. Fees to produce Contracts for Employment, etc. 11. Job Travel & Auto (31 cent/mile). (Form 2106) 12. Malpractice, Bond and other liability insurance 13. Membership Dues to professional societies 14. Office-At-Home expense (See Form 8829) 15. Passport fees for a business trip 16. Physical examinations for employment (see Medical expenses) 17. Research expenses of college professor 18. Small tool, equipment and supplies 19. Subscriptions to Professional Journals 20. Occupational taxes and fees 21. Telephone calls & beepers job requires 22. Travel directly to second job plus tolls 23. Union Dues & other 24. Work clothes and uniforms, Less reimbursed receipts 25. Other expenses 26. Appraisal fees to establish tax deduction 27. Financial Publications and Programs 28. Investment Expenses (including some Newspapers for tracking investments, alarm system & maintenance to protect art or coin collections, travel to investment broker or manager and cost of special proxy fights) 29. Hobby expenses to extent of income 30. Investment loss (bank failure & bad loans) 31. Investment counsel 32. IRA trustee's administrative fees billed separately 33. Legal & collection fees related to income property 34. Management of undeveloped property held for profits 35. Safe deposit box 36. Tax Counsel, Preparation and Audit
Child or Dependent Care
	Dependent Care Expenses Payment for Child and Dependent care Medical related dependent care

Solutions Solutions are dependent upon facts & circumstances, law and the objectives. These elements vary from one time to another, from one circumstance to another and from person or entity to another.

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The Question:

Special Items and Equipment: Your medical expenses can include payments for any of the following items.

Other Typical Individual or Family Expenses That May Offer Tax Write-Off's or Tax Credits

My university required each incoming freshman to come to school with their own computer. Is there any way to deduct the cost of the computer from my tax liability?

What educational expenses are deductible?

What are types of educational expenses?

Can I deduct the cost of classes I need for work?

Am I eligible to claim both my job education expenses (minus 2% of AGI) and the Lifetime Learning Credit on my taxes?

I took an accounting course in order to keep my salary on my current job. My employer did not reimburse me for the expenses. Can I take a deduction on my tax return for the cost of the course?

My employer is including my graduate school tuition reimbursements on my W-2. Where do I claim these education expenses on my Form 1040?

Is the exclusion from income of up to $5,250 of employer-provided educational assistance under a qualified program still available?