Sing Your Text, Complete The Following, In These Problems ✓ Solved

sing your text, complete the following. In these problems, apply

Apply your knowledge of the rules and laws associated with itemized deductions that appear on the Schedule A tax form.

Problem 50: Mickey is a 12-year-old dialysis patient. Three times a week for the entire year, he and his mother, Sue, drive 20 miles one way to Mickey’s dialysis clinic. On the way home, they go 10 miles out of their way to stop at Mickey’s favorite restaurant. Their total round trip is 50 miles per day. How many of those miles, if any, can Sue use to calculate an itemized deduction for transportation? Use the mileage rate in effect for 2019. Explain your answer.

Problem 51: Leslie and Jason, who are married, paid the following expenses during 2019: interest on a car loan $100, Interest on lending institution loan (used to purchase municipal bonds) $3,000, Interest on home mortgage (home mortgage principal is less than $750,000) $2,100. What is the maximum amount that they can use in calculating itemized deductions for 2019?

Problem 53: Reggie, who is 55, had AGI of $32,000 in 2019. During the year, he paid the following medical expenses: Drugs (prescribed by physicians) $500, Marijuana (prescribed by physicians) $1,400, Health insurance premiums–after taxes $850, Doctors’ fees $1,250, Eyeglasses $375, Over-the-counter drugs $200. Reggie received $500 in 2019 for a portion of the doctors’ fees from his insurance. What is Reggie’s medical expense deduction?

Problem 54: On April 1, 2019, Paul sold a house to Amy. The property tax on the house, which is based on a calendar year, was due September 1, 2019. Amy paid the full amount of property tax of $2,500. Calculate both Paul’s and Amy’s allowable deductions for the property tax. Assume a 365-day year.

Problem 58: Tyrone and Akira, who are married, incurred and paid the following amounts of interest during 2019: Home acquisition debt interest $15,000, Credit card interest $5,000, Home equity loan interest (used for home improvement) $6,500, Investment interest expense $10,000. What can they claim in their itemized deductions?

Problem 63: Jaylen made a charitable contribution to his church in the current year. He donated common stock valued at $33,000 (acquired as an investment in 2005 for $13,000). Jaylen’s AGI in the current year is $75,000. What is his allowable charitable contribution deduction? How are any excess amounts treated?

Problem 65: Reynaldo and Sonya, a married couple, had flood damage in their home due to a dam break near their home in 2019, which was declared a federally designated disaster area. The flood damage ruined the furniture that was stored in their garage. The following items were completely destroyed and not salvageable: Damaged Items FMV Just Prior to Damage Original Item Cost: Antique poster bed $6,000 $5,000, Pool table $7,000 $11,000, Flat-screen TV $700 $2,500. Their homeowner’s insurance policy had a $10,000 deductible for the personal property, which was deducted from their insurance reimbursement of $12,700, resulting in a net payment of $2,700. Their AGI for 2019 was $50,000. What is the amount of casualty loss that Reynaldo and Sonya can claim on their joint return for 2019?

Problem 66: Hortencia is employed as an accountant for a large firm in San Diego. For relaxation, she likes to go to a nearby casino and play in blackjack tournaments. During 2019, she incurred $6,475 in gambling losses and $5,250 in gambling winnings. Hortencia plans to itemize her deductions in 2019 because she purchased a home this year and has mortgage interest expense. What amount could she claim on her return for other itemized deductions for the year?

Paper For Above Instructions

Tax deductions play a crucial role in financial planning for individuals, especially under the context of the U.S. tax system where itemized deductions can significantly reduce taxable income. This discussion revolves around specific scenarios involving itemized deductions from the Schedule A tax form, focusing on various cases outlined in the problems provided.

Problem 50: Deduction for Transportation Expenses

In the case of Mickey, the distance between his home and the dialysis clinic is 20 miles one way, summing up to 40 miles for the round trip each visit. However, since they go an additional 10 miles for personal reasons (to eat at a restaurant), only the distance directly related to medical transportation is deductible. The IRS allows charitable deductions for transportation mileage associated with medical care. For 2019, the standard mileage rate for medical travel was set to $0.20 per mile (IRS, 2019). Therefore, for 3 visits per week over 52 weeks, Sue can claim only the mileage for the clinic trips. This totals 40 miles x 3 visits x 52 weeks = 6,240 miles. The calculation results in a deduction of 6,240 miles x $0.20 = $1,248.

Problem 51: Itemized Deductions for Leslie and Jason

Leslie and Jason's reportable expenses include car loan interest, interest on loans to purchase bonds, and home mortgage interest. For itemized deductions under Schedule A, the only deductible payments are the interest on the home mortgage and the municipal bond interest as personal interest on a car loan is non-deductible (IRS, 2019; Tax Policy Center, 2021). Thus, the allowable amount is $3,000 + $2,100 = $5,100 for itemized deductions.

Problem 53: Medical Expense Deductions for Reggie

For Reggie, the first step is to calculate his total medical expenses, which amount to $500 + $1,400 + $850 + $1,250 + $375 + $200 - $500 (insurance reimbursement) = $3,075. The IRS allows deductions of medical expenses that exceed 7.5% of adjusted gross income (AGI). With an AGI of $32,000, 7.5% is $2,400. Thus, the deductible medical expense would be $3,075 - $2,400 = $675.

Problem 54: Property Tax Deductions for Paul and Amy

In the property tax scenario involving Paul and Amy, given that property tax is due and Amy paid the total amount of $2,500, both Paul and Amy can claim the property tax deduction. As this tax pertains to the time when Paul owned the house, he can deduct the portion related to his ownership before the sale, while Amy can deduct the entire property tax amount since she paid it (IRS, 2019). Both collectively benefit from this property tax deduction, aiding their overall tax situation.

Problem 58: Interest Payments for Tyrone and Akira

Tyrone and Akira incurred multiple types of interest during 2019. The deductible amounts include $15,000 for home acquisition debt interest and $6,500 for home equity debt interest on home improvements. However, personal credit card interest is not deductible under the current tax law (IRS, 2019). Thus, they would claim a total of $21,500 in deductible interest.

Problem 63: Charitable Contributions by Jaylen

Jaylen's charitable contributions exceed the amount initially invested in the stock. The IRS rules state that contributions of appreciated stocks are limited to fair market value (FMV), minus the amount of gain that exceeds the total of the stock’s basis when the AGI exceeds in certain thresholds (IRS, 2019). Jaylen can claim $33,000, with any excess treated as a carryover for up to five years.

Problem 65: Casualty Loss for Reynaldo and Sonya

Reynaldo and Sonya's loss is significant due to disaster-related destruction. The IRS allows for casualty losses to be calculated as the lesser of the adjusted basis in the property or the decrease in fair market value (FMV) due to the casualty, less any insurance reimbursements minus a $100 floor (IRS, 2019). The loss totaling $29,025 (combined loss of $13,900 after insurance) can therefore be claimed on their joint return, subject to AGI limitations.

Problem 66: Gambling Loss Deductions for Hortencia

In the case of Hortencia, gambling losses can only be deducted to the extent of gambling winnings, meaning she can now only deduct up to her winnings of $5,250 (IRS, 2019). Thus, despite her total losses being greater, she can only declare $5,250 as an itemized deduction for gambling losses.

Conclusion

Understanding itemized deductions is essential for maximizing tax benefits. Each problem illustrates the extensive considerations regarding various aspects of Itemized Deductions under IRS regulations, highlighting how individuals can navigate their taxable income more effectively.

References

• IRS. (2019). Publication 502: Medical and Dental Expenses.
• IRS. (2019). Publication 530: Tax Information for First-Time Homeowners.
• IRS. (2019). Topic No. 503 Deductible Taxes.
• IRS. (2019). Publication 536: Net Operating Losses (NOLs) for Individuals, Estates, and Trusts.
• Tax Policy Center. (2021). The Tax Cuts and Jobs Act: Impacts on Individuals.
• IRS. (2019). Publication 526: Charitable Contributions.
• IRS. (2019). Publication 454: Casualties, Disasters, and Thefts.
• IRS. (2019). Publication 550: Investment Income and Expenses.
• IRS. (2019). Publication 561: Determining the Value of Donated Property.
• IRS. (2019). Publication 587: Business Use of a Home.