Multiple Choice Questions
1. Itemized deductions are taken when
a. The taxpayer wants to.
b. They are less than the standard deduction.
c. They are greater than the standard deduction.
d. The standard deduction is limited by high AGI.
2. The majority of itemized deductions are:
a. Business expenses.
b. Tax credits.
c. Personal living expenses.
d. None of the above.
3. Generally, a taxpayer may deduct the cost of medical expenses for which of the following?
a. Marriage counseling.
b. Health club dues.
c. Doctor-prescribed birth control pills.
d. Trips for general health improvement.
4. The threshold amount for the deductibility of allowable medical expenses ordinarily is:
a. 7.5% of AGI.
b. 10% of AGI.
c. 10% of taxable income.
d. 15% of taxable income.
5. During 2014, Jasmine incurred and paid the following expenses:
Prescription drugs ……………………………………… $ 470
Vitamins and over-the-counter cold remedies ………… 130
Doctors and dentist visits ……………………………… 700
Health club fee ………………………………………… 250
Cosmetic surgery ……………………………………… 2,400
What is the total amount of medical expenses (before considering the limitation based on AGI) that would enter into the calculation of itemized deductions for Jasmine’s 2014 income tax return?
a. $1,170
b. $1,300
c. $1,550
d. $3,950
6. Prescription drugs obtained from sources outside the United States, such as Canada, are
a. Always deductible no matter how they were obtained.
b. Deductible only for citizens of Canada living in the United States.
c. Deductible if prescribed by a physician and approved by the FDA for legal importation. d. Never deductible.
7. For 2014, Cynthia, who is single and 45 years of age, had AGI of $40,000. During the year, she incurred and paid the following medical costs:
Doctor and dentist fees ………………………………………………… $3,350
Prescription medicines …………………………………………………. 325
Medical care insurance premiums (paid for with after tax funds……… 380
Long-term care insurance premiums ………………………………….. 720
Hearing aid ……………………………………………………………. 150
What amount can Cynthia take as a medical expense deduction (after the AGI limitation) for her 2014 tax return?
a. $4,885.
b. $4,925.
c. $905.
d. $845.
8. During 2014 Ella paid the following taxes related to her home:
Property taxes on residence (paid from escrow account) …………………..$1,800
State personal property tax on her automobile (based on value) ………………600
Property taxes on land held for long-term appreciation………………………..400
What amount can Ella deduct as property taxes in calculating itemized deductions for 2014?
a. $ 400.
b. $ 1,000.
c. $ 2,400.
d. $ 2,800.