Please help me with the following questions. I am having some difficulty approaching them.
The IRS code provides for deductions and credits.
- List 5 possible deductions.
- List 3 possible tax credits.
- Compare and contrast a $10,000 adjustment, $10,000 tax credit and $10,000 of itemized deductions.
List 5 possible deductions:
Deductions imply amounts that are allowable on Schedule A - itemized deductions. They are used to reduce taxable income in amounts beyond the standard deduction. Refer to the 2011 Form 1040, page 2, line 40 where the standard deduction for a single person is $5800. When the total on Schedule A exceeds $5800, the larger amount of deductions can be used to lower taxable income.
Typical Schedule A deductions include:
- State income taxes paid
- Real estate ...
This solution discusses possible tax credits and deductions under the IRS code, as well as a comparison of a $10,000 adjustment, $10,000 tax credit and $10,000 of itemized deductions.