Q: If I were to make a gift of money (say, $1,000) to a young friend in financial difficulties, would I be able to declare it as a charitable gift on my tax return?

A: No. Gifts to individuals are not deductible as a charitable contribution. Only those contributed to qualified organizations, such as religious, non-profit schools & hospitals, Salvation Army, Red Cross, Scouts, United Way, etc. are deductible.

Q: How are deductions handled when married persons file separate returns? Most of the expenses come out of a joint account, must they be split in half?

A: Expenses paid out of a joint account are assumed to be equally split unless there is evidence presented that the actual ownership of the funds differs from the title on the account.

If you file married filing separate and one person itemizes the other must also itemize.

Q: Can membership fees for a health club be deducted? If so where is it entered?

A: No. You cannot include in medical expenses health club dues, or amounts paid to improve one's general health or to relieve physical or mental discomfort not related to a particular medical condition.
You cannot include in medical expenses the cost of membership in any club organized for business, pleasure, recreation, or other social purpose.

Q: If I incur medical costs at the end of the year and don't pay them until the following year, in which year can I take the deduction?

A: You deduct unreimbursed medical expenses in the year you actually make the payment.

Q: I own foreign securities in my IRA. Foreign income taxes are withheld from every dividend payment. Are they deductible or can I get a tax credit?

A: The foreign income tax you pay on investments held inside a retirement plan (pension, IRA, etc.) is not recoverable. You can not take a foreign tax credit for foreign taxes paid inside an IRA or a qualified retirement plan nor can you deduct them on your tax return. This follows the same rule that says you can't deduct your losses inside a retirement plan, nor do you report your gains inside a plan, nor can you deduct any commissions or fees you pay from inside the plan. One needs to be careful about the types of investments one holds inside retirement plans as it relates to the loss of certain tax benefits.

Q: Can I claim my Real Estate Excise Tax when we bought our new home?

A: Property taxes are deductible when paid to the taxing authority. Tax stamps or excise taxes on a sale are added to your cost basis and are not deductible.

Q: I am 70 years old and severely handicapped. Is it possible to deduct my adult daycare expenses?

A: It is possible for adult day care expense to be a deductible medical expense.

In order to get a tax deduction for medical expenses you must first itemize all your deductions. In addition, only medical expenses in excess of 7.5% of your AGI will qualify as an itemized deduction.

Your adult day care expense might qualify as medical expense if you are receiving qualified long term care services and those services are provided pursuant to a plan of care prescribed by a licensed health care practitioner.

It is very important to obtain and save certifications and care plans to substantiate the deduction.

Se IRS Pub 502, Medical & Dental Expenses for more information.

Q: A year ago AARP published a list of fair market values for used clothing. I realize FMV is dependent on condition and current value, but I believe that I undervalue my clothing. Do you have a rule of thumb list?

A: Fair market value is the price a willing buyer would pay a willing seller. The best way to make the determination is to actually pay a visit to thrift shops and record the prices being charged for the type and condition of clothes in question.

The following site has a rule of thumb. But please note that the rule of thumb doesn't necessarily contain the value for what you donated.
http://www.salvationarmysouth.org/valueguide.htm

Also note that for household items including clothing, furniture, furnishings, electronics, appliances, linens and similar items, no deduction is allowed unless the items are in good condition. At this time, the IRS has not provided any guidance as to the definition of "good condition." However, it is anticipated that household items that have minimal monetary value such as used socks or used undergarments would not be an eligible deduction.

Q: I was not able to itemize my mortgage interest last year since I didn't have enough deductions to itemize. Can I add this interest to this year's and deduct them both?

A: No you cannot deduct last year's mortgage interest expense this year. Itemized deductions for any tax year can only reflect payments you made in that year.

Q: My husband and I have a mortgage on our home, an RV and a timeshare. I was wondering if we can claim the interest we paid on all three of these as a deduction?

A: Mortgage interest is deductible on your primary residence and a second home. The loans must be secured by those properties. Though under certain circumstances mortgage interest is deductible on certain types of timeshares, you are limited to first and second home in your deduction. Of course, you must itemize your deductions on schedule A to claim this deduction.

Q: My vehicle was broken into last year.I filed a police report and incurred unreimbursed repair costs of $4000. Is the amount I paid deductible in my tax return?

A: You have a casualty loss that may or may not be deductible on Schedule A of Form 1040. The amount of casualty loss deductible is determined by first subtracting $100 from the loss and then subtracting 10% of Your AGI. Any loss left after those computations may be deducted if you itemize deductions. You will need to complete IRS Form 4684.

Q: I am considering a reverse mortgage. Are any of the costs of such a mortgage tax deductible?

A: A reverse mortgage is a loan. There is nothing to deduct as you are not paying any interest expense.

The mortgage interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or full.

Since reverse mortgages are home equity loans, you can deduct interest only for loan amounts up to $100,000. If the loan balance is more than $100,000 when the mortgage is paid off, not all of the mortgage interest will be deductible.

Q: I am trying to find the correct amount to put on Schedule A for general sales taxes. Can I add to the amount in the table the sales tax we paid for an automobile we purchased?

A: Yes, but only up to the amount of tax paid at the general sales tax rate. Please remember, that you can deduct general sales taxes paid or state income taxes paid, not both.

Q: One month after retirement as a full-time chemist, I attempted to get a similar part-time job as a consultant. May I deduct mailing, computer, phone expenses associated with this attempt?

A: Yes, as long as the search was for a new job in your present line of work and your expense was incurred reasonably close to the ending of the last job. They are deductible even if you do not get the new job. They are deductible as a miscellaneous itemized deduction subject to the 2% of adjusted gross income on Schedule A.

Q: Are you allowed to deduct expenses for traveling to the doctor's office? If you go for treatment out of state, are you allowed to deduct travel and lodging expenses while at the treatment center?

A: You deduct out-of-pocket car expenses, such as gas & oil, but not depreciation, insurance, repairs or maintenance, when used primarily for, and essential to, medical care. Or, you can use the standard medical mileage allowance. As this rate may change each year, the following link has the rate for years for multiple years.

http://www.smbiz.com/sbrl003.html#smr

You may include the cost of meals and lodging at a hospital or similar institution, if the principal reason for being there is to get medical care.

You may include the cost of other non-extravagant lodging, not provided in a hospital, up to $50 a night for each person (meals are not included), if you meet the following requirements:

(1) Primarily & essential to medical care.
(2) The medical care is provided by a doctor in a licensed hospital or in medical care facilities related to, or equivalent of a licensed hospital.
(3) There is no significant element of personal pleasure, recreation, or vacation in travelling away from home.

You cannot include going to and from work, even if your condition requires an unusual means of transportation. Also not included, if for personal reasons you wanted to go to another city for an operation or other medical care.

Q: I am disabled and must use a motorized wheelchair. Can I deduct the cost of a van that I had modified to add a motorized lift for my wheelchair?

A: Only the special costs to modify the van are deductible as a medical expense. E.g., you can deduct the cost of adding the lift and modifying the braking system.

Q: Are the Part B & Part D medicare premiums deducted from my social security benefits each month, tax deductible?

A: Yes. Premiums you pay for Parts A, B & D are considered to be deductible health insurance premiums.

Q: I have $3,200 in W2-G's. My gambling losses are considerably more than my winnings, and I have proof of my losses. Is there any way I can write off my losses against my winnings without itemizing? I don't have enough deductions to make it worthwhile to file a Schedule A and Form 1040.

A: Unfortunately, tax law only allows an individual to deduct gambling losses against gambling winnings only if the individual elects to itemize all deductions.

Q: If you have a lot of medical bills and cannot find all the receipts but know the amounts that you paid, can you use that when filing?

A: You must be able to substantiate what you paid. Generally this would be a statement from the company you paid that reflects the amount paid, what expense was paid and the date payment was made. Your canceled check would not suffice as it would not reflect for what purpose the payment was made.

You should contact the company you paid and ask them to send you a statement that reflects the above information.

Q: I own a second home in Canada, and paid $3000 in property taxes. Can I claim that on my Schedule A?

A: If you itemize your deductions you may deduct real property taxes you paid on real estate you own as long as the taxes are assessed on the value of the property, assessments are made uniformly throughout the area where the property is located and the tax proceeds are used for the general community or governmental purposes.

If you made payment in foreign currency, you must convert that currency to US dollars using any reasonable method that does not distort your income or deductions.

Q: I do not itemize deductions. I have heard that there is an extra standard deduction for home owners. Can you elaborate.

A: For 2008 and 2009, if you do not itemize you can increase your standard deduction by the amount of real property tax you paid that you could have deducted if you did itemize. You may add the lesser of the amount of tax you paid or $500 ($1,000 on a joint return).

Q: Are the fees to register my vehicle with my State, tax deductible?

A: Possibly.

If this is a business vehicle, the fee itself is a valid business expense for a business vehicle where the actual expense method, not the standard mileage rate is used.

If it is your personal vehicle and the state or local government imposes a fee every time you register the vehicle based on the then current value of the vehicle, that is a personal property tax deductible on Schedule A under taxes.

If you pay extra for a special tag used for charitable purposes and the funds are sent to a charitable organization or government agency, the additional amount paid for those tags is deductible on Schedule A as a cash charitable contribution. The DMV should be able to tell you how much of any special license plate fee is for charitable purposes.

Q: We had a storm last summer and had over $20,000 of damage to our house. We had to pay the $1000 deductible on our insurance policy. Is this something I can claim on my taxes?

A: You have a casualty loss. The amount of loss must be computed using IRS Form 4684, Casualties and Thefts. Section A of the form is used for personal–use property.

Please note that you must also elect to itemize your deductions On Schedule A. In addition, the amount you can deduct is the excess over 10% of your AGI after first deducting $100 from the loss.

Q: We paid our 2008 real estate tax bill in January 2009. Is this deductible on our 2008 tax return?

A: It is not deductible in 2008. You take a tax deduction in the year you actually made the tax payment. In this instance, that would be 2009.

Q: I have heard that for 2009, there is an additional standard deduction if you purchased a new vehicle. Can you elaborate.

A: For 2009, you will be able to add to your standard deduction, the amount of any state and local sales and excise tax on the purchase of a new passenger vehicle, light truck or motorcycle that weighs no more than 8500 gross pounds. Motor homes also qualify for the deduction. The purchase must have taken place after Feb. 16, 2009. You may only deduct the amount of tax attributable to the first $49,500 of purchase price. The amount of the deduction will phase out when your AGI exceeds $125,000 ($250,000 on a joint return).
See the instructions that come with either Form 1040 or 1040A when they are published by the IRS.