MEDICAL AND DENTAL EXPENSES

Deductible expenses include:

• Prescription medicines and drugs (including insulin)
• Medical, dental, and nursing care, including amounts paid for unreimbursed qualified long-term care services
• Treatment at a center for alcohol or drug addiction; or for participation in a smoking-cessation program and for drugs to alleviate nicotine withdrawal that require a prescription
• Medical and hospital insurance premiums, including amounts paid for eligible long-term care (subject to certain limitations based on the insured person’s age)
• Admission and transportation to a medical conference relating to a chronic illness of you, your spouse, or your dependent (costs must be primarily for and essential to necessary medical care). The costs for meals and lodging while attending the medical conference may not be deducted.
• Prescription eyeglasses, hearing aids, crutches, wheelchairs, and guide dogs
• Certain home improvements made for medical purposes or to make the home suitable for a disabled person

Nondeductible expenses include:

• Life insurance policy premiums
• Nursing care for a healthy baby
• Nonprescription drugs of medicines
• Weight-loss programs (unless recommended by doctor)
• Funeral, burial, or cremation costs
• Unnecessary cosmetic surgery (surgery that does not correct congenital abnormality or an abnormality caused by injury or disease)

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TAXES

Deductible Taxes:

• State, Local and Foreign Income Taxes – those taxes include tax withheld, estimated payments and tax paid for an earlier year
• Real Estate Taxes – State, Local or Foreign taxes on real property, such as the taxpayer’s house or land, are deductible.  Real estate taxes are deductible when paid.  If taxes are paid with a mortgage payment and held in escrow, do not deduct the taxes until they are paid back by the bank or the mortgage lender.
• Personal Property – Tax-Taxes that state and local governments charge on the value of personal property is deductible.  A portion of the cost of personal vehicle registration may fall in this category

Nondeductible Taxes:

• Federal taxes – income tax, social security (FICA), Medicare, railroad retirement tax, and excise taxes or customs duties
• Water and sewer taxes
• State, local and federal taxes on gasoline, diesel, and other motor fuels used in a non-business vehicle.
• Utility taxes – gas, electricity, etc.

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INTEREST

Home Mortgage Interest

A taxpayer can fully deduct points in the year he or she pays them only if all of the following conditions apply:

• The taxpayer itemizes deductions
• The loan is used to buy or improve a main home (a main home is the one the taxpayer lives in most of the time)
• The loan is secured by that main home
• The loan meets the requirements for deductible mortgage interest, discussed earlier under Home Mortgage Interest
• Paying points is an established business practice in the area where the loan was made

Non-deductible Interest:

• Loan fees; aid for services necessary to get a loan (closing cost, down payment)

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CONTRIBUTIONS

Qualifying Organizations:

• Churches, synagogues, temples, mosques, Salvation Army, Red Cross, CARE, United Way, Boy & Girl Scouts, World Wildlife Fund, etc.
• Nonprofit schools and hospitals

Nonqualifying Organizations:

• Business organizations, such as the Chamber of Commerce
• Political organizations and candidates
• Homeowner’s associations

Deductible Items:

• Money gifts
• Dues, fees, and assessments paid to qualified organizations above the value of the benefits received (not country clubs or other social organizations)
• Fair market value of used clothing, furniture, etc.

Nondeductible Items:

• Cost of raffle, bingo, or lottery tickets
• Blood donated to a blood bank or the Red Cross
• Direct contributions to an individual

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MISCELLANEOUS ITEMIZED DEDUCTIONS

Deductible Items:

• Uniforms not adaptable to general use
• Employment-related educational expenses (only for Armed Forces reservist, Qualified Performing artist, Fee-basis state or local government official, disabled individual with impairment-related education expenses)
• Safe deposit box rental for investment documents
• Acupuncture
• Insulin
• Air conditioner for allergies
• Nursing fees
• Contacts, including supplies
• Chiropractic services
• Cosmetic surgery for deformity relating to a congenital abnormality, accident, or disease
• Birth control prescribed by a doctor
• Investment interest
• Casualty losses
• Theft losses
• Work clothes not suitable for normal wear
• Travel expenses relating to managing investments
• Fees to collect interest or dividends
• Trust administration fees
• Impairment related work expenses
• Gambling losses (may not exceed amount of winnings)

Nondeductible Items:

• Burial or funeral expenses
• Wedding expenses
• Home repairs, insurance and rent
• Insurance premiums (except medical insurance premiums)
• Losses from the sale of a taxpayer’s home, furniture, personal care, etc.
• Personal legal expenses
• Commuting expenses to and from work
• Union dues and fees (only for Armed Forces reservist, Qualified Performing artist, Fee-basis state or local government official, disabled individual with impairment-related education expenses, self-employed)
• Professional books, magazines, journals, etc. (only for qualified education expenses and self-employed)
• Alimony Payments (Divorce agreements 2018 or earlier)
• Expenses of looking for a new job (only prior to 2018)
• Investments counsel fees (only prior to 2018)
• Tax counsel and assistance (only for self-employed or prior to 2018)
• Occupational licensing fees (only for self-employed)
• IRA administration fees (only prior to 2018)

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