Question
4 points Which of the following would count as an itemized deduction? Click all that apply. mortgage interest loans given to friends medical and dental expenses gifts to charity cost of a remodel on the home interest charged on car loans property taxes
Answer
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(341 Votes)
Malcolm
Advanced · Tutor for 1 years
Answer
To solve this question, we'll need to understand what itemized deductions are according to the IRS (Internal Revenue Service). Itemized deductions allow taxpayers to reduce their taxable income based on specific expenses. These deductions include a wide range of expenses, but not all expenses qualify. Let's evaluate each option given:1. **Mortgage Interest**: This is a classic example of an itemized deduction. Taxpayers can deduct the interest paid on a mortgage for their primary residence and possibly a second home.2. **Loans Given to Friends**: These are not deductible. Personal loans given to others, regardless of the purpose, do not qualify for itemized deductions.3. **Medical and Dental Expenses**: These expenses can be itemized, but only to the extent that they exceed 7.5% of the taxpayer's adjusted gross income (AGI) for the year.4. **Gifts to Charity**: Charitable donations are deductible as itemized deductions, provided they are made to qualified organizations and proper documentation is kept.5. **Cost of a Remodel on the Home**: Generally, the cost of home improvements is not deductible in the year spent. These costs can add to the basis of your home and reduce capital gains tax if and when you sell the home but do not count as an itemized deduction at the time of remodeling.6. **Interest Charged on Car Loans**: This is not deductible for personal use vehicles. Interest on car loans does not qualify as an itemized deduction.7. **Property Taxes**: State and local property taxes are deductible as itemized deductions, subject to a total limit for state and local taxes paid ($10,000 limit as of the last update in my knowledge base).**Conclusion and Accurate Answers**:- Mortgage Interest- Medical and Dental Expenses (with the specified limitation)- Gifts to Charity- Property TaxesThese categories are recognized by the IRS for itemized deductions, while the other options listed do not qualify.