Question 1

Which of the following costs are potentially deductible on Form 1040,Schedule A as taxes for 2014? 1.Property tax on principal residence.
2)Garbage pickup itemized on the real estate bill.
3)Real estate tax on property owned as an investment.
A)None of the items.
B)2 and 3.
C)1 and 3.
D)All of the items.

Accepted Answer

Property tax on a principal residence and real estate tax on investment property are deductible on Schedule A. Garbage pickup fees are not deductible as taxes.

Question 2

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

Accepted Answer

The answer of Taxpayers must itemize their deductions to be...

Question 3

In 2014,the U.S.President declared a federal disaster due to the flooding in North Carolina.Dan lives in that area and lost his home in the flood.What choice does he have regarding when he can claim the loss on his tax return?
A)It must be claimed in 2013 if the return has not been filed by the date of the loss.
B)It must be claimed in 2014 if the loss is greater than the modified adjusted gross income.
C)It may be claimed in 2015 if an election is filed with the 2014 return.
D)It may be claimed in 2013 or 2014.

Accepted Answer

According to IRS rules, a taxpayer can choose to claim a disaster loss on the tax return for the year the loss occurred or the tax return for the prior year. Therefore, Dan can choose to claim the loss on his 2013 or 2014 tax return. However, he should carefully consider the tax implications and consult a tax professional before making a decision.

Question 4

The cost of a chiropractor's services does not qualify as a medical deduction.

Accepted Answer

The cost of a chiropractor's services can qualify as a medical deduction on U.S. federal income tax returns, as long as the services are considered medical care.

Question 5

The standard business mileage rate for automobiles for all of 2014 is 56 cents per mile.

Accepted Answer

This is correct. The standard business mileage rate for automobiles for 2014 was indeed 56 cents per mile, according to the IRS.

Question 6

Which of the following organizations qualify for deductible charitable contributions?
A)Churches.
B)State political organizations.
C)Both a and b.
D)None of the above.

Accepted Answer

Churches are recognized as an eligible charitable organization under the Internal Revenue Code and donations made to them qualify for tax-deductible contributions. State political organizations, on the other hand, are not recognized as charitable organizations and contributions made to them do not qualify for tax deductions.

Question 7

In 2014,Maria who is 43,had adjusted gross income of $27,000,paid the following medical expenses: Prescription medicines $275
Dentist and doctor expenses 1,350
Health insurance premiums 400
Two pair of eyeglasses 185
What amount can Maria deduct as medical expenses (after the adjusted gross income limitation)in calculating her itemized deductions for 2014?
A)$2,710.
B)$2,025.
C)$ 685.
D)$ 0.

Accepted Answer

The answer of In 2014,Maria who is 43,had adjusted gross...

Question 8

Malika and Henry's vacation home was completely destroyed by fire.They had no insurance to the cover the loss.On which of the following forms would they report their loss?
A)Form 4684,Casualties and Thefts,and Form 1040,US.Individual Income Tax Return,as an adjustment to gross income.
B)Schedule A,Itemized Deductions,only.
C)Form 4684,Casualties and Thefts,and Schedule A,Itemized Deductions.
D)Form 4684,Casualties and Thefts,only.

Accepted Answer

Malika and Henry would report their loss on Form 4684, which is specifically designed for casualties and thefts. They would also report it on Schedule A, as a deduction for their personal property loss. Therefore, the best choice is option C, which includes both Form 4684 and Schedule A.

Question 9

The interest paid on a loan used to acquire municipal bonds is deductible as investment interest expense.

Accepted Answer

Interest paid on a loan to acquire municipal bonds is not deductible because the interest income from municipal bonds is generally exempt from federal income tax.

Question 10

Marty and Cindy are married and both are professors at a local college.They contribute money to various organizations each year and file a joint return.Their adjusted gross income for 2014 is $100,000.They contributed to the following organizations in 2014: • $3,500 to the Sierra club
• $10,000 to the Red Cross
• $2,000 to a local political candidate
• $11,000 to cancer research foundation
• Donated clothing to Goodwill.(Marty purchased
The items for $850,but the thrift shop value of the
Same items at a local second-hand store is equal to $60.)
How much can Cindy and Marty deduct as charitable contributions for the year 2014?
A)$26,560.
B)$26,500.
C)$25,710.
D)$24,560.

Accepted Answer

Cindy and Marty can deduct contributions to qualified organizations: $3,500 (Sierra Club) + $10,000 (Red Cross) + $11,000 (Cancer Research Foundation) + $60 (Goodwill thrift shop value) = $24,560. Contributions to a political candidate are not deductible.

Question 11

Generally,the taxpayer may deduct the cost of medical expenses on Schedule A for which of the following?
A)Doctor prescribed birth control pills.
B)Controlled substances like marijuana that are in violation of federal law.
C)Trips for general health improvement.
D)Marriage counseling.

Accepted Answer

The cost of doctor prescribed birth control pills is a deductible medical expense.

Answer: B
 Controlled substances like marijuana that are in violation of federal law are not deductible medical expenses.

Answer: C
 Trips for general health improvement are not deductible medical expenses.

Answer: D
 Marriage counseling is not a deductible medical expense unless it is specifically prescribed by a doctor as a necessary part of medical treatment.

Question 12

The adjusted gross income limitation on casualty losses is 7.5 percent.

Accepted Answer

The adjusted gross income limitation on casualty losses is 10 percent.

Question 13

Which of the following statements is true regarding documentation requirements for charitable contributions?
A)If the total deduction for all noncash contributions for the year is more than $500,Section A of Form 8283,Noncash Charitable Contributions,must be completed.
B)A noncash contribution of less than $250 must be supported by a cancelled check,or a receipt,or other written acknowledgement from the charitable organization.
C)A contribution charged to a credit card is considered a cash contribution for purposes of documentation requirements.
D)All of the above are true.

Accepted Answer

A noncash charitable contribution of $500 or more requires completion of Section A of Form 8283. Noncash contributions under $250 can be supported by a cancelled check, receipt, or other written acknowledgement from the charity. Contributions charged to a credit card are considered cash contributions for documentation purposes. Therefore, all three statements are true.

Question 14

Which of the following is deductible as a miscellaneous itemized deduction?
A)Job-hunting expenses.
B)Union dues.
C)Professional dues and subscriptions.
D)All of the above are considered miscellaneous deductions.

Accepted Answer

Miscellaneous itemized deductions include unreimbursed employee expenses, tax preparation fees, and certain other expenses.

Question 15

Juan paid the following amounts of interest in 2014: $150 on his personal credit card
$9,500 on his home mortgage
$750 on a personal car loan,which was not used for business
$350 on funds borrowed to purchase tax-exempt securities
What is his deductible interest for 2014?
A)$ 350.
B)$1,250.
C)$9,500.
D)$9,850.

Accepted Answer

The only deductible interest in this scenario is the $9,500 paid on the home mortgage, as personal credit card interest, personal car loan interest, and interest on funds borrowed to purchase tax-exempt securities are not deductible.

Question 16

What is the maximum amount of personal residence acquisition debt on which interest is fully deductible?
A)$1,000,000.
B)$ 500,000.
C)$ 250,000.
D)$ 0.

Accepted Answer

The maximum amount of personal residence acquisition debt on which interest is fully deductible is $1,000,000. This applies to loans taken out to buy, build, or substantially improve the taxpayer's primary or secondary home.

Question 17

The threshold amount for the deductibility of allowable medical expenses for those under 65 in 2014 is:
A)10% of AGI.
B)10% of taxable income.
C)7.5% of AGI.
D)7.5% of taxable income.

Accepted Answer

In 2014, the threshold for deducting medical expenses for those under 65 was 10% of Adjusted Gross Income (AGI).

Question 18

Premiums paid for long-term care insurance are not deductible as medical expenses.

Accepted Answer

Premiums paid for qualified long-term care insurance can be deductible as medical expenses to the extent that they, along with other unreimbursed medical expenses, exceed 7.5% of the individual's adjusted gross income.

Question 19

The Frazins had adjusted gross income of $140,000 in 2014.During the year,their principal residence was severely damaged by a house fire.The pertinent financial information is as follows: Cost basis = $134,000
Value before casualty = $156,000
Value after casualty = $20,000
The Frazins had some insurance and in 2014 reached a settlement with the insurance company for $110,000 insurance settlement.What is their allowable casualty loss deduction for 2014?
A)$ 9,900.
B)$23,900.
C)$36,000.
D)None of the above.

Accepted Answer

The casualty loss is calculated as the lesser of the decrease in fair market value ($156,000 - $20,000 = $136,000) or the adjusted basis ($134,000). The insurance reimbursement is $110,000. The loss before the insurance is $134,000, so the loss after insurance is $134,000 - $110,000 = $24,000. For tax purposes, the deductible loss is reduced by $100 and then by 10% of the AGI ($140,000 x 10% = $14,000). Therefore, the deductible loss is $24,000 - $100 - $14,000 = $9,900.

Question 20

Shanika lives in California which imposes a state tax on income.For 2014,Shanika had the following transactions related to her state income taxes: State taxes withheld in 2014 $3,500
Refund received in 2014 of 2013 tax 600
Assessment paid in 2014 of 2013 tax 750
Shanika plans to itemize on her 2014 return.What amount of state and local taxes should Shanika deduct in calculating itemized deductions for her 2014 federal income tax return?
A)$ 750.
B)$3,500.
C)$4,250.
D)$4,850.

Accepted Answer

Shanika can deduct the state taxes withheld in 2014 of $3,500, the refund received in 2014 of 2013 taxes of $600, and the assessment paid in 2014 of 2013 taxes of $750. Thus, the total amount of state and local taxes Shanika should deduct in calculating itemized deductions for her 2014 federal income tax return is $3,500 + $600 + $750 = $4,250.

Quiz 5: Itemized Deductions

Which of the following costs are potentially deductible on Form 1040,Schedule A as taxes for 2014? 1.Property tax on principal residence. 2) Garbage pickup itemized on the real estate bill. 3) Real estate tax on property owned as an investment.

Taxpayers must itemize their deductions to be allowed a charitable contribution deduction.

In 2014,the U.S.President declared a federal disaster due to the flooding in North Carolina.Dan lives in that area and lost his home in the flood.What choice does he have regarding when he can claim the loss on his tax return?

The cost of a chiropractor's services does not qualify as a medical deduction.

The standard business mileage rate for automobiles for all of 2014 is 56 cents per mile.

Which of the following organizations qualify for deductible charitable contributions?

Malika and Henry's vacation home was completely destroyed by fire.They had no insurance to the cover the loss.On which of the following forms would they report their loss?

The interest paid on a loan used to acquire municipal bonds is deductible as investment interest expense.

Generally,the taxpayer may deduct the cost of medical expenses on Schedule A for which of the following?

The adjusted gross income limitation on casualty losses is 7.5 percent.

Which of the following statements is true regarding documentation requirements for charitable contributions?

Which of the following is deductible as a miscellaneous itemized deduction?

Juan paid the following amounts of interest in 2014: $150 on his personal credit card $9,500 on his home mortgage $750 on a personal car loan,which was not used for business $350 on funds borrowed to purchase tax-exempt securities What is his deductible interest for 2014?

What is the maximum amount of personal residence acquisition debt on which interest is fully deductible?

The threshold amount for the deductibility of allowable medical expenses for those under 65 in 2014 is:

Premiums paid for long-term care insurance are not deductible as medical expenses.