Client’s List of Deductions

Title Page

ABSTRACT

This is an explanation of which expenses submitted by a client to a staff tax accountant are allowed as deductions and which ones are not. There is an explanation for those items not allowable as well as a reference as to where the IRS has made notice of its non-qualifying condition.

The staff tax accountant has brought forth a client’s paperwork with questions regarding the client’s list of deductions. The client is seeking to itemize expenses and the accountant is unsure as to which expenses qualify and which ones do not. The client’s adjusted gross income is $45,000. The following is the list provided by the client:

Medical and Dental

• Reimbursed health insurance premiums                 $1500.00
• Prescriptions                                                                      150.00
• Contact lenses                                                                    200.00
• Unreimbursed medical expenses                                    875.00

          Taxes Paid

• Personal property tax                                                        500.00
• Real estate tax                                                                    850.00
• State income tax withheld                                             1675.00

Charity Contributions                                                                                                                            

• Cash contribution                                                    200.00
• Services provided                                                  1000.00

   Interest Paid

• Mortgage interest                                                         3850

The prescriptions, contact lenses and the unreimbursed medical expenses are all eligible for consideration for deduction, however, the reimbursed health insurance premiums do not qualify as these payments have paid back to the client and according to IRS Publication 502, page 9, non-deductible. For the purpose of filling out the schedule A, the eligible expenses combined total must exceed 10% of the client’s AGI of $45,000, or $4500.00 in order for them to be deductible. In this case, the combined total of $875.00, $200.00 and $150.00 is $1225.00, well below the $4500.00 and therefore not deductible.