Standard and Itemized Deductions

1. Standard and Itemized Deductions • Changes in Standard Deduction • Changes in Itemized Deductions • Changes in allowed scope Standard and Itemized Deductions

2. What’s new for 2010 • No additions to standard deduction for property tax • No special treatment for sales tax paid on a new car purchased in 2010, but provision for deducting sales tax on new car purchased in 2009 if tax was paid in 2010 • Form 8283 Part I is now officially in scope • No reduction in total itemized deductions due to high AGI Standard and Itemized Deductions

3. Addition of Real Estate Taxes to Standard Deduction • This expired on December 31 2009 • It was not extended • The only allowable additions to the standard deductions are the ones due to age and blindness, certain casualties, and delayed payment of sales tax on 2009 new car purchases Standard and Itemized Deductions

4. Entering the Standard Deduction • Use Schedule L to increase standard deduction for certain casualty losses or sales tax paid in 2010 on new cars purchased in 2009 • Otherwise enter the standard deduction directly on the 1040, line 40 Standard and Itemized Deductions

5. Schedule L • Use Schedule L to increase standard deduction for certain casualty losses or sales tax paid in 2010 on new cars purchased in 2009 • Otherwise enter the standard deduction directly on the 1040, line 40 Standard and Itemized Deductions

6. Itemized Deductions • Provision for deducting sales tax on new car purchased in 2009 if tax was paid in 2010 • No more reduction in total itemized deductions for high AGI taxpayers Standard and Itemized Deductions

7. Review of Schedule A Itemized Deductions • Medical Expenses (above 7-1/2% of AGI) • Taxes you pay • Interest you pay • Gifts to Charity • Casualty & Theft Losses • Job Expenses etc (above 2% of AGI) • Miscellaneous Expenses Standard and Itemized Deductions

8. Medical Expenses Standard and Itemized Deductions

9. Medical Expenses • Medical and long term care insurance premiums and co-pays, doctor, dentist, glasses, hearing aids, Rx, etc. • No life, burial, disability or daily benefit insurance premiums are deductible • No “general health” expenses (vitamins, gyms) • Expenses paid with pre-tax money (cafeteria or flex-plans) cannot be deducted Standard and Itemized Deductions

10. TaxWise Hint - Medical • Use the worksheet • Medicare premiums carry in • Long term care carries to NY • It does the multiplication for the miles Standard and Itemized Deductions

11. Taxes You Paid Standard and Itemized Deductions

12. State Income Tax OR Sales Tax • State Income Tax includes • Amount withheld on W2 or 1099-R • Estimated payments made in 2010 • Amount paid with return in 2010 • NY SDI shown on W2 • TaxWise will not carry from W2. Suggest scratch pad linked from Schedule A line 5a • Sales Tax based on • Actual receipts or • Sales Tax Tables in Schedule A plus cars or other specific big-ticket items. Standard and Itemized Deductions

13. Delayed Sales Tax on Purchase of New Car in 2009 • Only applies to split-year transactions • Car was purchased in 2009 after Feb 16 • Sales tax was not paid until 2010 • Common in some states, but rare in NY • Sales tax may be deducted on line 7 in addition to state income tax on line 5 or may increase standard deduction • See back of Schedule A or Schedule L Standard and Itemized Deductions

14. Property Tax Deductions • All personal use non-business properties • Main home • Vacation homes • Camps, vacant lots, etc • Can be located outside USA • County, Village, School, etc. taxes Standard and Itemized Deductions

15. Interest You Paid Standard and Itemized Deductions

16. Mortgage Interest Deduction • Two houses maximum • Limitations • Limited to $1,000,000 purchase mtg • Limited to $100,000 home equity mtg* • Mortgage cannot exceed FMV of house • Points deductible on purchase mtg • Must be amortized on re-finance * May impact AMT Standard and Itemized Deductions

17. Mortgage Insurance Deduction • Insurance paid on new mortgages originated in 2007 thru 2011* • Phase out for AGI above $50K ($100K MFJ) • Effective 2007 thru 2011* *changed 12/17/10 Standard and Itemized Deductions

18. Gifts to Charity Standard and Itemized Deductions

19. Gifts to Charity • Any cash contributions must be supported by: • Bank record (check, receipt, or statement) or • Written communication from charity • Donations of Clothing or Household items must be in good condition Standard and Itemized Deductions

20. Charity Worksheet • TaxWise has a nice charity worksheet • Separate cash from non-cash • No “What did I give last year” estimates or data written on the ceiling • Individual cash donation of $250 or more requires charity acknowledgement • Non-cash contributions over $500 in total require Form 8283 (link from worksheet) Standard and Itemized Deductions

21. Form 8283 • Used when total non-cash contribution is over $500 but no line item is over $5,000 • Items can be grouped “3 boxes men’s clothes” • Line item over $500 requires additional data (like purchase date, price, etc.) • Limit of two 8283s per e-filed return Standard and Itemized Deductions

22. In Scope portion of 8283 Standard and Itemized Deductions

23. Casualty and Theft Losses Out Of Scope Standard and Itemized Deductions

24. Miscellaneous Deductions Standard and Itemized Deductions

25. MISCELLANEOUS DEDUCTIONS • Must exceed 2% of AGI • Line 21 – Un-reimbursed employee expenses • Line 22 – Tax Preparation Fees • Line 23 – Other Expenses Standard and Itemized Deductions

26. MISCELLANEOUS DEDUCTIONS • Not subject to 2% • Gambling Expenses to the extent of winnings • Certain work-related expenses for disabled Standard and Itemized Deductions

27. Total Itemized Deductions • No worksheet or reduction in total due to high AGI Standard and Itemized Deductions