Chapter 10: Itemized Deductions

These flashcards cover key vocabulary and concepts related to itemized deductions, focusing on medical expenses, charitable contributions, and the rules surrounding their deductibility.

Itemized Deductions

Personal expenses that can be deducted from taxable income, including medical expenses, taxes, mortgage interest, and charitable contributions.

Medical Expenses

Expenses that are deductible to the extent they exceed 7.5% of the taxpayer's AGI and are unreimbursed.

Threshold Percentage (Floor)

A minimum percentage of AGI that must be exceeded for specific expenses to be deductible.

Deductible Medical Expenses

Expenses such as transportation for medical care, insurance premiums, and rehabilitation costs that can be deducted from taxable income.

Nondeductible Medical Expenses

Expenses including funeral costs, cosmetic surgeries, and general health items that cannot be claimed as deductions.

Nursing Home Expenditures

Costs that are deductible if the primary reason for placement is medical care.

Health Savings Account (HSA)

A savings account used in conjunction with a high-deductible health insurance policy, allowing tax-free contributions and distributions for medical expenses.

State and Local Taxes

Certain taxes allowed as deductions, with specific guidelines about which are deductible or not.

Charitable Contributions

Donations made to qualified organizations, which may be deductible under IRS rules.

Valuation Requirements

Donated property is valued at fair market value when determining deductibility.

Limitations on Charitable Contributions

Deductions for charitable contributions are subject to limitations based on AGI and the type of property donated.

Contributions Carryover

Excess contributions that cannot be deducted in the current year may be carried forward for up to five years.