Question

Identify some common miscellaneous itemized deductions and identify any limitations that are imposed on the deductibility of these items. One itemized deduction allowed is for medical expenses. In what cases are medical insurance premiums paid by an individual not deductible as qualified expenses

Answer 1

Answer:

The answer is below

Explanation:

Itemized deductions is an auditing or accounting terms, that  describes the various expenses that are deducted from the adjusted gross income to reduce the taxable income of an individual or the corporations. For example, job search expenses, mileage expenses, charitable expenses, and etc.

Some common miscellaneous itemized deductions are:

1.  Job search expenses: these are deductible from Adjusted Gross Income (AGI) such as travel expenses, resume preparation costs, moving costs, etc.

2.  Mileage expenses: mileage expenses is allowed by Internal Revenue Services (IRS) to be deducted from Adjusted Gross Income (AGI) for example; payments, repairs, insurance, etc.

3.  Charitable expenses: Charitable expenses are also eligible to deduct from Adjusted Gross Income (AGI) e.g. charitable gifts, donations, etc.

Limitations imposed on items which are deductible

Regardless, if it is job search expenses, mileage expenses, or charitable expenses, all are deductible if they are eligible for the deduction, and according to the IRS, the eligibility criteria are that all the expenses must exceed the 2% of AGI (Adjusted gross income).

Cases in which medical expenses are not deductible

Given that an individual or company pay the amount of medical expenses from their pocket, not from the business cost, hence, in this case, medical insurance is not deductible from the AGI.

At the same time, the insurance premium is excluded for the deduction if they exceed from the fixed amount set by the IRS, therefore, the employer-paid insurance funds cannot be deducted.