BUS FPX 4065 Assessment 4 Itemized Deduction Schedule A

Student Name

Capella University

BUS-FPX4065 Income Tax Concepts and Strategies

Prof. Name

Date

Schedule A Form: A Guide to Itemized Deductions

A taxpayer utilizes a Schedule A form to ascertain eligibility for itemized deductions versus standard deductions, ultimately aiding in the reduction of total tax obligations for the fiscal year.

Health-Related Expenses (Medical/Dental)

In light of the COVID-19 pandemic, the IRS allows deductions for the expenses of Personal Protective Equipment (PPE) if acquired through health plans, health flexible spending accounts, Archer medical savings accounts, or health reimbursement accounts. Mr. and Mrs. Weaver have the opportunity to deduct health and dental insurance payments from their 2021 wages and claim deductibles/co-payments that exceed 7.5% of their total Adjusted Gross Income (AGI). Moreover, deductions can be claimed for expenses such as laboratory services, medical testing, nursing care, and various other medical services. Eligible items also include weight-loss programs for specific diseases, smoking cessation programs, Medicare insurance, and medical devices. However, certain exclusions apply, including injuries from accidents, life insurance, non-FDA approved drugs, and cosmetic surgery unless medically necessary due to a deformity.

State and Local Deductions

A section of the Schedule A form accommodates deductions for state and local taxes paid. The Weavers, for instance, paid $12,230 in property tax, exceeding the claimable amount of $10,000. They can thus input $10,000 on line 7 for total taxes paid. Alternatively, charitable donations may serve as a substitute for state and local taxes but must have a direct correlation.

Paid Interest

The Weavers have paid $12,246 in mortgage interest, qualifying for inclusion on line 8a of Schedule A. However, expenses for home improvements financed by the mortgage cannot be factored into mortgage interest calculations.

Gifts to Charity

Verification is imperative for the Weavers’ $4,500 in charitable donations. A written acknowledgement from the charity specifying the amount and purpose of the donation is requisite. Donations encompass various items such as clothing, equipment, vehicles, church tithe, and cash. Non-cash donations necessitate the completion of Form 8283.

Total Itemized Deductions

The total itemized deductions for the Weavers amount to $26,746, surpassing the standard deduction limit of $25,000. Consequently, they would input $26,746 on line 12a of their 1040 form.

References

IRS.gov (N.D.). Publication 526. Charitable contributions 2021 returns. Retrieved from https://www.irs.gov/pub/irs-pdf/p526.pdf

IRS.gov (N.D.). Publication 936. Home mortgage interest deductions. Retrieved from https://www.irs.gov/pub/irs-pdf/p936.pdf

IRS.gov (N.D.). 2021 Instructions for Schedule A, itemized deductions. Retrieved from https://www.irs.gov/pub/irs-pdf/i1040sca.pdf

IRS.gov (N.D.). Schedule A, itemized deductions. Retrieved from https://www.irs.gov/pub/irspdf/f1040sa.pdf

BUS FPX 4065 Assessment 4 Itemized Deduction Schedule A