Itemized Deductions

MEDICAL AND DENTAL EXPENSES

Deductible expenses include:

  • Prescription medicines and drugs (including insulin)
  • Medical, dental, and nursing care, including amounts paid for unreimbersed 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
  • Unecessary cosmetic surgery (surgery that does not correct congenital abnormality or an abnormality caused by injury or disease)

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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 perosnal 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 sewr 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 paayment)

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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

Nonqualifying Organizations:

  • Business organizations, such as the Chamber of Commerce
  • Politcal 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
  • Cosmsetic 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

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