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Schedule A Income Tax Calculation

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A staff tax accountant has come to you for advice. She has begun a tax return and does not know what to do with the expenses that the client has submitted as itemized deductions. She is unsure which expenses are allowable and should be included on her Schedule A. Review the expenses submitted by the client below. (Note: The client's AGI is $45,000.)

Client submitted expenses:
Personal property taxes $ 500
Reimbursed health insurance premiums $ 1,500
Charitable contributions (cash only) $ 200
Prescriptions $ 150
Mortgage interest $ 3,850
Contact lenses $ 200
State income taxes withheld $ 1,675
Unreimbursed medical expenses $ 875
Services provided to a qualified non-profit $ 1,000
Real estate taxes $ 850
Using the client submitted expenses above, complete the following:
• List the allowable expenses.
• Assist your staff with the completion of the Schedule A tax form for the most recent tax year.
• For each expense not allowed, please explain why it is disallowed.
To obtain the most recently revised Form 1040 (Schedule A), follow these instructions:
1. Go to http://www.irs.gov/app/picklist/list/formsInstructions.html
2. In the Find box, type 1040 (in product number) and click "Find"
3. Scroll down to Form 1040 (Schedule A&B), titled Itemized Deductions and Interest & Ordinary Dividends
4. Complete Schedule A only.

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Solution Preview

I cannot fill out Schedule A for you, but can assist with getting you started and in the right direction.

Personal property taxes $ 500 <--- This is allowable, and we can see that it is entered on line 7 of Schedule A, under "Taxes You Paid."

Reimbursed health insurance premiums $ 1,500 <--- This is not a deduction. We never include health insurance premiums that we have paid but have been reimbursed by our employer or another party. The same is true for medical expenses. If I pay ...

Solution Summary

This solution explains each item listed for preparation of Schedule A.