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Tax Federal Itemized Deduction

In: Business and Management

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Ken and Mary Jane Blough have failed to keep records of their itemized deductions. The IRS now is asking for verification of these deductions. The standard deduction for the Blough’s is $11,900. If the amount of their itemized deductions is less than the standard deduction than they should have just taken the standard deduction and this audit would not be necessary. In the Blough’s case the total of their itemized deductions is much more than the standard deduction and therefore they must show verification if they want to itemize.
The first deduction they took was in regards to medical expenses of $7,102 which only $1,477 was deductible because of the 7.5% floor of AGI from the taxpayer (Internal Revenue Code Sec. 213). The second deduction they took was taxes of $6,050 which are fully deductible as long as none of them are fees (Internal Revenue Code Sec 164). The third deduction they took was interest of $10,659 which is fully deductible depending on the type of interest that is involved (Internal Revenue Code 163). The last deduction they took was charitable contributions of $2,693 which are fully deductible as long they are donated to a 50% organization (Internal Revenue Code 170). No deduction is allowed for a charitable contribution unless the taxpayer gathers the appropriate documentation and substantiation. Therefore the $1,477 is not deductible. The total amount of their itemized deductions is $19,402. This is an estimate because the research problem does not supply adequate information on the detail of the itemized deductions. I would tell the Blough’s to look very closely and find as much documentation as they can to support these itemized deductions. If they cannot find the paperwork needed to come with an accurate itemized deduction total I would advise them to take the standard deduction. That would be a much better choice…...

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