Question 1

Unreimbursed employee business expenses are miscellaneous itemized deductions, subject to the 2 percent of adjusted gross income limitation.

Accepted Answer

Unreimbursed employee business expenses are deductible as miscellaneous itemized deductions, but they are subject to the 2 percent of adjusted gross income limitation.

Question 2

If a ballet dancer seeks work as a ditch digger, the expenses of job hunting may be deductible.

Accepted Answer

The answer of If a ballet dancer seeks work as...

Question 3

An employee may deduct the cost of welder's safety goggles used at work as a miscellaneous itemized deduction.

Accepted Answer

These expenses can be included as miscellaneous itemized deductions if they exceed 2% of the employee's adjusted gross income. However, it's important to note that starting in 2018, miscellaneous itemized deductions are no longer allowed under the new tax law.

Question 4

During 2014, Mary paid the following expenses: What is the total amount of medical expenses (before considering the limitation based on adjusted gross income) that would enter into the calculation of itemized deductions on Mary's 2014 income tax return?

Accepted Answer

The answer of During 2014, Mary paid the following expenses:...

Question 5

The expense of a review course for a state real estate agent's exam is deductible as a miscellaneous itemized deduction by a taxpayer attempting to become an agent.

Accepted Answer

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Question 6

The cost of an appraisal of a painting may be deducted if the purpose of the appraisal is related to the preparation of an income tax return.

Accepted Answer

According to the IRS, the cost of an appraisal of a painting may be deducted if the purpose of the appraisal is related to the preparation of an income tax return. However, the deduction is subject to certain limitations and requirements. It is important to consult with a tax professional for specific guidance.

Question 7

Itemized deductions are subject to a phase-out based on AGI for certain high-income taxpayers.

Accepted Answer

Itemized deductions are subject to a phase-out for taxpayers with an AGI above a certain threshold amount. This threshold varies depending on the taxpayer's filing status. As the AGI increases, the amount of itemized deductions that can be claimed decreases, until they are completely phased out. This phase-out is commonly referred to as the "Pease limitation," named after former Congressman Donald Pease who helped implement it in the 1990s.

Question 8

Educational expenses are deductible as a miscellaneous itemized deduction even if the education is required to meet the minimum requirements for the taxpayer's current job.

Accepted Answer

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Question 9

Roberto, age 50, has AGI of $112,000 for 2014. He has medical expenses of $12,800. How much of the medical expenses can Roberto deduct on his Schedule A for 2014?

Accepted Answer

Roberto's medical expenses must exceed 10% of his AGI ($11,200) before he can deduct any amount. His expenses exceed this threshold by $1,600 ($12,800 - $11,200), so he can deduct $1,600 on his Schedule A.

Question 10

All personal casualty losses incurred during the year are added together and only one $100 floor amount is used to reduce the casualty deduction.

Accepted Answer

The floor amount used to reduce the casualty deduction is 10% of the adjusted gross income, not a flat $100.

Question 11

A theft loss is deductible in the year the theft is discovered, even if the theft occurred in a prior year.

Accepted Answer

According to IRS rules, a theft loss is deductible in the year it is discovered or when it is deemed unrecoverable, even if it occurred in a prior year. The taxpayer should file a Form 4684, Casualties and Thefts, or claim the loss as an itemized deduction on Schedule A of their tax return.

Question 12

Which of the following is not considered a deductible medical expense?

Accepted Answer

A face lift is considered a cosmetic procedure and is not considered a deductible medical expense. The other options (eye exams, prescription drugs, and medical insurance) are typically considered deductible medical expenses.

Question 13

Jon, age 45, had adjusted gross income of $26,000 in 2014. During the year, he incurred and paid the following medical expenses: Jon received $900 in 2014 as a reimbursement for a portion of the doctors' fees. If Jon were to itemize his deductions, what would be his allowable medical expense deduction after the adjusted gross income limitation is taken into account?

Accepted Answer

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Question 14

In 2014, David, age 65, had adjusted gross income of $31,000. During the year he paid the following medical expenses: What amount can David deduct as medical expenses (after the adjusted gross income limitation) in calculating his itemized deductions for 2014?

Accepted Answer

In order to calculate the medical expense deduction, David must first reduce his total medical expenses by 10% of his adjusted gross income ($31,000 x 10% = $3,100). This leaves him with $1,175 in medical expenses. However, since David's itemized deductions do not exceed the standard deduction for his filing status, he will not be able to claim any deduction for medical expenses. Therefore, the correct answer is C ($0 remaining deductible medical expenses after the adjusted gross income limitation).

Question 15

If an employee receives a reimbursement for employee business expenses, the amount of the reimbursement is always excluded from gross income and the expenses are deductible as deductions for adjusted gross income.

Accepted Answer

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Question 16

Expenses of education to improve or maintain existing skills are deductible as a miscellaneous itemized deduction even if the education incidentally leads to qualification in a new job or business.

Accepted Answer

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Question 17

Randy is advised by his physician to install an elevator in his residence, since he is afflicted with heart disease. The cost of installing the elevator is $10,000 and it has an estimated useful life of 10 years. He installs the elevator in January of 2014, and it increases the value of his residence by $8,000. Disregarding the limitation based on adjusted gross income, how much of the cost of the elevator may Randy take into account in determining his medical expense deduction for 2014?

Accepted Answer

Randy can only include medical expenses that exceed 10% of his adjusted gross income (AGI) for the year. Assuming his medical expenses exceed this threshold and he itemizes deductions, he can include the cost of installing the elevator in his medical expenses, but only to the extent that it exceeds the increase in value to his residence. Therefore, the amount he can include is $10,000 - $8,000 = $2,000.

Question 18

Which of the following is not deductible as a medical expense on Schedule A?

Accepted Answer

Payments for marriage counseling are not deductible as medical expenses on Schedule A. Only expenses related to the diagnosis, care, treatment, and prevention of disease or illness are deductible as medical expenses.

Question 19

The cost of uniforms is deductible only by self-employed taxpayers.

Accepted Answer

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Question 20

If the taxpayer fails to locate a job, job hunting expenses are not deductible.

Accepted Answer

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Quiz 5: Itemized Deductions and Other Incentives