A Staff Tax Accountant Has Come To You For Advice

Question

A Staff Tax Accountant Has Come To You For Advice She Has Begun A Tax A staff tax accountant has come to you for advice. She has begun a tax return and does not know what to do with the expenses that the client has submitted as itemized deductions. She is unsure which expenses are allowable and should be included on her Schedule A. Review the expenses submitted by the client below. (Note: The client's AGI is $45,000.) Client submitted expenses: Personal property taxes $ 500 Reimbursed health insurance premiums $ 1,500 Charitable contributions (cash only) $ 200 Prescriptions $ 150 Mortgage interest $ 3,850 Contact lenses $ 200 State income taxes withheld $ 1,675 Unreimbursed medical expenses $ 875 Services provided to a qualified nonprofit $ 1,000 Real estate taxes $ 850. Using the client submitted expenses above, complete the following: List the allowable expenses. Assist your staff with the completion of the Schedule A tax form for the most recent tax year. For each expense not allowed, please explain why it is disallowed. To obtain the most recently revised Form 1040 (Schedule A), follow these instructions: Go to the IRS website, search for Form 1040 Schedule A, and download the latest version. Complete Schedule A only. You do not have to complete Schedule B.

Dr. Jack HW Helper · Accepted Answer

The primary task involves evaluating the submitted expenses to determine which qualify as deductible itemized expenses on Schedule A of the IRS Form 1040. Analyzing each expense within the context of IRS rules on allowable deductions is essential to accurately prepare the tax return for the client. First, it is necessary to identify which expenses are generally deductible according to IRS guidelines. These include certain taxes, mortgage interest, charitable contributions, unreimbursed medical expenses, and expenses related to providing services to qualified nonprofits. Allowable Expenses Personal Property Taxes ($500): Deductible if based on the property's value and assessed annually. Personal property taxes are generally deductible as an itemized deduction on Schedule A, provided they are based on the value of personal property such as vehicles or boats. Mortgage Interest ($3,850): Deductible as mortgage interest on Schedule A, especially if the mortgage is for your primary residence or a qualified second home, subject to IRS limits. State Income Taxes Withheld ($1,675): Deductible as part of state and local income taxes paid, or paid during the year, which is included in the SALT deduction on Schedule A. Real Estate Taxes ($850): Deductible as real estate taxes paid on property, subject to the SALT limit. Unreimbursed Medical Expenses ($875): Deductible to the extent that they exceed 7.5% of AGI. With an AGI of $45,000, 7.5% equals $3,375, and since medical expenses total $875, they are below the threshold, and thus, not deductible for this year. Charitable Contributions ($200): Deductible if made to qualified charitable organizations and paid in cash. Services Provided to a Qualified Nonprofit ($1,000): Generally not deductible unless it is a fee or donation to a qualifying nonprofit, but since it appears to be a service, it is not deductible unless specifically allowed by law (e.g., certain volunteer expenses). As it is unspecified, it is presumed non-deductibl

A Staff Tax Accountant Has Come To You For Advice

A Staff Tax Accountant Has Come To You For Advice She Has Begun A Tax

Paper For Above instruction

Allowable Expenses

Non-Allowable Expenses and Reasons

Summary of Allowable Expenses for Schedule A

Additional Considerations

Instruction to Complete Schedule A

References