Discover the Best Itemized Receipt Example for Facilities

Itemized receipt example for Facilities

welcome to module 10 of the tax layer probe basic income tax preparation course in this module we'll go over itemized deductions for filing 2018 tax returns itemized deductions are taken on Schedule A and as we've already seen the Internal Revenue Service allows each taxpayer a standard deduction amount based on filing status some individuals however may find that they get a better tax break if they itemize their deductions now as we've seen the standard deduction has gone up substantially for 2018 tax returns itemized deductions allow taxpayers to reduce their taxable income based on specific personal expenses if the total itemized deductions are greater than the standard deduction then it will result in a lower taxable income and lower tax this means keeping track of expenses meeting income thresholds and satisfying certain deductibility limits schedule a generally allows the taxpayer to subtract from income the amount spent on medical care other taxes some interest payments charitable gifts some casualty losses that's changed quite a bit for 2018 as well and if the taxpayers are filing married filing separate and one spouse itemizes the other spouse must itemize even if his or her total deductions are less than the standard deduction if either taxpayer later amends the return the spouse must also amend and a spouse who qualifies as head of household is not required to itemize deductions even if the spouse who is required to file married filing separate decides to itemize his deductions it's a spouse filing head of household decides to itemize deductions Ben the spouse filing married filing separate is required to itemize deductions for example Doris and Dan are filing married filing separately Doris qualifies for head of household filing status since she lives in a rental house separately from Dan with their four-year-old daughter and provides more than half of her daughter's support dan itemizes deductions since he has substantial mortgage interest and taxes for the house that he lives in and owned so which of the following would be applicable to Doris his tax return a she can choose to itemize or use the standard deduction B she cannot use the standard deduction since her husband itemizes C she can use the standard deduction if she files her tax returned before Dan files or D she must itemize deductions since her husband itemizes deductions well the correct answer is a she can choose to itemize or use the standard deduction whichever benefits are the most so let's take a close look at the breakdown with Schedule A and see what's on the form first of all first section we have medical and dental expenses next the taxes you paid and notice here state and local taxes are limited to ten thousand dollars for a married filing joint couple the interest paid section home mortgage interest gifts to charity casualty and theft losses again big change in the casualty and theft losses we'll go over this in more detail later but the casualty and theft laws for 2018 has to be from a federally declared disaster area and then we have other itemized deductions and again we'll go over these in more detail and finally we have a total that we subtract from income the total itemized deductions then flow from Schedule A to page two line eight of the new form 1040 now like the various adjustments to income itemized deductions provide a way to convert taxable income into non-taxable income provided that the money is spent on various what we call tax privileged items we deduct from taxable income any money specifically spent on healthcare state and local taxes and again there's a limitation on this for 2018 mortgage interest charitable donations and generally unless the taxpayer is making mortgage payments has a lot of medical expenses typically catastrophic medical expenses or gives a lot to charity he or she will be locked into the standard deduction again as we said before the standard deduction has gone up substantially for 2018 if the taxpayer does on a home makes large donations or has a lot of medical bills then he or she will want to take a look at trying to take advantage of itemized deductions on schedule a first let's look at medical expenses only the portion of total medical expenses that are greater than seven-and-a-half percent of a person's adjusted gross income can be deducted as part of itemized deductions in other words we subtract seven and a half percent of the adjusted gross income from the medical expenses medical expenses must be reduced by any reimbursement that's received for the expenses for example Tom Swift had adjusted gross income of $38,000 on line seven of his form 1040 his total eligible medical expenses totaled twenty eight fifty are any of his medical expenses deductible in this case well thirty eight thousand five hundred this is adjusted gross income seven and a half percent leaves 2888 twenty eight fifty where his total medical expenses minus the seven and a half percent of adjusted gross income so tom has no deductible medical expenses in this case qualifying medical expenses generally speaking a medical expense will qualify for a tax deduction if the expenses for the diagnosis cure treatment or prevention of disease and the following general types of medical expenses qualified costs for medical services from physicians surgeons dentists and other medical professionals costs for medications prescribed by a medical professional costs for medical devices equipment and supplies prescribed by medical professionals such as eyeglasses and costs for health and dental insurance costs for long-term care and long-term care insurance also transportation and lodging costs for traveling to a healthcare facility including mileage for driving for medical care is deductible and for tax year 2018 a mileage rate is 18 cents per mile home improvements may be deducted if the main purpose is to provide a medical benefit the deduction is limited to the difference between the increase in the fair market value of the home and the cost of the improvement for example Roy and Ethel are an elderly married couple last year Roy suffered a stroke and is now partially paralyzed and confined to a wheelchair for this reason they a ramp leading from their front door to the walk and grab bars in the bathroom the cost of the material and installation was 54 95 for the ramp and 375 for the grab bars for a total of 58 70 the increase in the fair market value of their home was minimal at $4,000 so Roy and Ethel will be able to claim the difference of 1870 as a medical expense on Schedule A a deduction may be taken for inpatient treatment at a drug or alcohol therapeutic center for the addiction meals and lodging Mallette the center are also deductible travel expenses are deductible if deemed necessary as part of the treatment for alcoholism that the taxpayer attends Alcoholics Anonymous meetings and stop smoking programs are deductible as a medical expense medications and AIDS must be prescribed by a doctor over-the-counter treatments nutritional supplements vitamins and first aid supplies things like aspirin bandages do not qualify as tax deductible expenses unless those items are prescribed by a medical professional controlled substances such as cocaine and marijuana as of this date are not tax-deductible either even if prescribed now let's look at the taxes you paid section of Schedule A and again there are five types of deductible non-business taxes state local and foreign income taxes state local and foreign real estate taxes state and local personal property taxes state and local sales taxes and qualified motor vehicle taxes or ad valorem taxes if the taxpayer lives in a state that collects state or local income taxes then the amount paid goes online five of the new schedule a that includes any tax payments that were withheld from a paycheck and shown on the w-2 plus any balance due paid on the previous year's state tax return the following state tax amounts are also deductible any estimated taxes paid to a state or local governments during the year and any prior year's state or local income tax paid during the year property owners can deduct real estate taxes they paid we entered this amount on line 5b of Schedule A and these taxes are charged every year usually from a county tax assessor if the taxes are paid by a mortgage company with escrowed funds a taxpayer would only deduct the actual amount of taxes paid in the tax year not the full amount of escrow payments that were sent in to the lender some states counties and cities impose personal property taxes the most common of this type of collection is on Motor Vehicles this is not the license-plate tag fee it's a tax based on the value of the vehicle or ad valorem tax car taxes as well as other personal property tax bills are deducted on line 5c of Schedule A and again new for 2018 tax returns there is a ten thousand dollar limit on salt or state and local taxes line six Schedule A gives the chance to deduct taxes paid to a foreign country or US possession line six covers other taxes we add the amounts from lines 5e and six to arrive at total deductible taxes now let's look at the interest section of Schedule A interest you paid and this is primarily for the benefit of homeowners while interest paid on personal loans and credit cards won't help at tax time decades ago it used to but interest on home loans both primary residents and a second home is deductible for tax years twenty eighteen to twenty twenty-five single and married filing joint filers can claim an itemized deduction for a hundred percent of the interest they pay on up to $750,000 of debt secured by the first and second homes or 375,000 if married filing separately now this is mortgage indebtedness if the mortgage existed before December 14 2017 taxpayers received the same tax treatment as the old rules with the 1 million dollar debt limit on line 8a we enter the home mortgage interest paid and this amount is typically reported on a form 1098 from the mortgage lender by the end of each January if the home was purchased last year and points were paid for the loan those points typically each point is 1 percent of the loan amount will be listed on the 1098 form and should be included on line 8a if mortgage interest paid was not reported on a 1098 we enter it on line 8 B of the Schedule A now this might be the case if an extra house payment was sent late in the year and the lender didn't properly credit the additional money if interest was paid to an individual from whom the taxpayer bought the home as a personal sale this interest is also reported on line 8 B along with the sellers name address and tax ID number again new for 2018 limit for loan proceeds not used to buy billed or substantially improve your home you can only deduct home mortgage interest to the extent that the loan proceeds from your home mortgage are used to buy build or substantially improve the home securing the loan this is qualifying debt again new for 2018 a limit on loans taken out on or before December 15th 2017 for qualifying debt taken out on or before December 15 2017 you can only deduct home mortgage interest on an amount up to a million dollars or five hundred thousand if you're married filing separately of that debt loans taken out after December 15 2017 for qualifying debt taken out after December 15 2017 you can only deduct home mortgage interest on up to $750,000 or three hundred seventy five thousand if you're married filing separately again new laws for 2018 the new tax law suspends the deduction for home equity interest from twenty eighteen to twenty twenty six unless the loan is used to buy build or substantially improve the home that secures the loan if you take out the loan to pay for things like an addition a new roof or a kitchen renovation you can still deduct the interest but if you use the money this is home equity debt now if you use the money to pay off credit card debt or student loans or take a vacation the interest is no longer deductible points not reported on Form 1098 points are shown on your settlement statement points you paid only to borrow money are generally deductible over the life of the loan and for 2018 tax returns makes there's an expired deduction for mortgage insurance premiums at the time this course went to print the deduction for mortgage insurance premiums had expired you can't claim a deduction for PMI paid or accrued after 2017 interest paid on money borrowed to buy investment property such as stocks and bonds can be deducted on line 9 schedule a complete form 4952 investment interest expense deduction in order to claim this interest we add lines eighty and nine and the total amount of interest paid goes on line ten the IRS allows taxpayers to deduct donations given to approve charity sponsors church donations Salvation Army goodwill so on in the next section of schedule a these gifts are detailed on line 11 we enter all the gifts by cash or cheque made to qualify charities this includes contributions to religious groups churches synagogues mosques nonprofit organizations Salvation Army Red Cross Goodwill Industries the United Way for example veterans associations not-for-profit schools and public park and recreational facilities if a gift was $250 or more the taxpayer must have a receipt from the recipient to prove the donation and here's the gifts to charity section of schedule a gifts of property are located on line 12 of schedule a on this line we enter the value of used clothing household goods or vehicles that were donated and we should keep itemized lists of what was donated and its fair market value fair market value means the price at which the property would change hands between a willing buyer and a willing seller keep these lists for records of proof if the amount of any single non-cash contribution is greater than $500 we have to use Form 8283 non-cash charitable contributions this form has to be completed and attached to the return and if the deduction is more than five thousand the IRS may require appraisals of the donated property travel costs at fourteen cents a mile to do charitable work can also be deducted as well as out-of-pocket expenses related to a charitable endeavor such as stamps purchasing stamps for a group mailing and these amounts would also be included on line 12 of Schedule A now there are some outer limits some contribution outer limits and this is new for 2018 there's a higher limitation threshold for certain charitable contributions for most gifts by cash or check the total amount of such contributions that can be deducted is now limited to sixty percent of your adjusted gross income instead of the older 50% if more than the outer limits are donated the taxpayer can then carry over the non deductible amount the taxpayer has five years to deduct this carryover on future tax returns if there's a carryover from last tax year we enter the allowable amount again within the percentage guidelines on line 13 of the Schedule A we add lines 11 through 13 in the gifts to charity section of Schedule A and this amount represents the deductible gifts to charity and is totalled on line 14 of the schedule now let's look at casualty and theft losses on Schedule A line 15 there have been substantial changes for 2018 there's never anything good when a person is the victim of a casualty the IRS understands this and allows taxpayers to recover some of their losses at tax filing time a casualty loss occurs when there is property damage from a sudden unanticipated event not from gradual progressive damage examples of sudden events that might qualify as a casualty include acts of nature like hurricanes tornados floods storms and volcanic eruptions for tax years 2018 through 2025 the tax cuts and Jobs Act has suspended the itemized deduction for personal casualty and theft losses the tcga did retain a deduction for qualified disaster related personal casualty losses for years 2018 through 2025 qualified disaster related personal casualty loss is one that occurs in a presidentially declared disaster area and as a result of the disaster for example if your home was destroyed by a hurricane within an area the president has declared to be a disaster area and you have a casualty loss then you can deduct the loss however if your home is destroyed by a fire that was not in a disaster area let's say due to a fire that started in your kitchen while you were cooking you can't claim a casualty loss even though your loss would be as great as that of the person living in the disaster zone qualifying disasters for the 2018 tax return and be declared by the president under the Stafford Act this act constitutes the statutory authority for most federal disaster response activities especially as they pertain to FEMA and FEMA programs hurricane Harvey is among the qualifying disasters tropical storm Harvey hurricane Irma hurricane Maria or the 2017 California wildfires taxpayers don't get to deduct the full amount of an unexpected disaster loss you would complete form 46 84 to determine how much can be entered online fifteen of the new schedule a form 46 84 first reduces the loss by $100 and then by 10 percent of AGI we've seen this before in the older versions of form 46 84 if you have a qualified disaster loss on the 46 84 line 15 and you aren't itemizing your deductions you can still claim an increased standard deduction using Schedule A by doing the following you calculate the amount on 46 84 line 15 you list your standard deduction amount on the dotted line next to line 16 as standard deduction claimed with qualified disaster loss combine these two amounts on line 16 and then enter on 1040 line 8 you do not enter an amount on any other line of the Schedule A now let's take a look at the form 2106 employee business expenses there's have been some changes for the 2018 tax returns 21:06 is now used only by Armed Forces reservists qualified performing artists and fee basis state or local government officials employees with impairment-related work expenses also qualified to use the 2106 employees who don't fit into one of these listed categories may not use the form 21:06 you're considered to be in the National Guard or reservists if you're a member of the reserve of the Air Force Army Coast Guard Marine Corps or Navy Army National Guard Air National Guard or Public Health Service Reserve Corps you can deduct expenses for traveling more than 100 miles from your main home your deductible expenses are limited to the federal per diem rates for the city that you're traveling to performing artists are considered to be those who provide services in the performing arts for two or more employers receiving at least $200 or more in wages from each employer your job related expenses are more than ten percent of your income from your performing artist jobs and you have adjusted gross income of sixteen thousand dollars or less without regard to this deduction your filing status cannot be married filing separately qualified performing artists who pays for job-related expenses out of his or her own pocket claims those expenses as an above the line tax deduction there's no need to itemize fee based government officials are considered to be those who are compensated entirely or partly on a fee basis the job-related expenses are deductible a government official who's compensated entirely or partly on a fee basis would claim the job related expenses tax deduction on Form 2106 and these expenses are then transferred to Schedule one form 1040 line 24 and here we see those expenses showing up on line 24 of Schedule one and then transferring to the 1040 now let's look at other itemized deductions line 16 schedule a one of the most common deductions listed here by individual taxpayers is gambling losses we enter gambling losses on line 16 of the Schedule A and remember while gambling losses aren't restricted by a percentage of income they are limited by your good luck you deduct gambling losses only up to the amount won in other words if the taxpayer won a thousand dollars and had losses of 1700 then he or she can only deduct a thousand dollars include the winnings on Schedule one form 1040 line 21 as income other miscellaneous deductions allowed on line 16 include casualty and theft losses from income producing property federal estate tax on certain inherited income amortizable bond premiums on certain bonds the deduction for repayment of amounts under a claim of right certain unrecovered investment in a pension and impairment related work expenses of a disabled person for more information on these other itemized deductions on line 16 consult publication 529 so we add the amounts on lines for medical 7 the taxes 10 the interest we paid 14 charitable deductions 15 casualty and theft losses 16 other itemized deductions and we enter the total on line 17 then we carried this amount to line 8 of the form 1040 if the total itemized deductions on line 8 of the form 1040 exceeds the standard deduction amount for the taxpayers filing status then it will definitely benefit the taxpayer to itemize his or her deductions and file Schedule A and new for 2018 the overall limitation on itemized deductions no longer applies we look at the 2017 form there was a limitation on itemized deductions no longer an overall limitation on itemized deductions based on the taxpayers adjusted gross income some taxpayers can't take the standard deduction and must itemize one instance is filing as married filing separately and the spouse whose itemized examples of types of expenses that indicate looking at itemized deductions on the tax return our large out-of-pocket medical and dental expenses state and local income taxes sales taxes real estate taxes and or personal property taxes and again keep in mind for 2018 there's a $10,000 limit mortgage interest gifts to charity and casualty losses from federally declared disasters are all examples of types of expenses that indicate taking a look at item izing deductions on the tax return also any other itemized deductions that we just talked about now let's take a look at a few review questions