Distinction between deduction for AGI and from AGI
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1) Why is the distinction between deductions for AGI and deductions from AGI important for individuals?
2) Al Capone's conviction in the mid 1930s has caused mobsters and illegal gangsters to rethink keeping detailed records. Why? When can you take deductions for bribes and kickbacks?
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1) Why is the distinction between deductions for AGI and deductions from AGI important for individuals?
The reason why the distinction for or from AGI is important is that AGI is an amount used in a number of tax calculations to limit deductions.
For example, medical expenses are allowable to the extent they exceed 7.5% of AGI. That mean when figuring the net medical deduction, a calculated 7.5% of AGI must be subtracted first.
Second example: Miscellaneous itemized deductions on Schedule A are limited to the amount that exceeds 2% of AGI using the same type of calculation to limit deductions.
Given a choice, lowering AGI would always be preferable to calculating deductions after (from) AGI. And what that ...
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