Test Yourself On Tax Deductions

Have you filed your federal income tax return for 2011? If not, you might still be able to slim down your tax bill by claiming deductions you may have missed.

What can you deduct? There are two main groups of income tax deductions on a federal tax return. The first group, often referred to as “above- the-line” deductions, are those that may reduce the amount of your adjusted gross income (AGI). Above- the-line deductions include those for IRA contributions, college tuition and fees, and some that you can claim if you’re self-employed.

The second group of deductions fall “below the line”; they’re claimed on Schedule A and attached to your Form 1040. You may be more familiar with these write-offs, which include traditional tax-savers such as deductions for medical expenses, charitable contributions, and mortgage interest payments and property taxes.

How well do you know the rules for federal income tax deductions? Use this quiz to test your knowledge.

 

  • Which of the following statements about IRA contributions made by participants in employer-sponsored retirement plans is true?
    1. Contributions are always deductible.
    2. Contributions are deductible only if your AGI is below an annual threshold.
    3. Contributions are deductible only if you are retired.
    4. Contributions are never deductible.

 

  • The maximum deduction for tuition and fees paid to a college is:
    1. $1,000
    2. $2,000
    3. $3,000
    4. $4,000.

 

  • If you are self-employed, your premiums for health insurance:
    1. Are deductible in full.
    2. Are deductible only up to 50% of the cost.
    3. Are deductible only up to 80% of the cost.
    4. Are never deductible.

 

  • Deductions for cash gifts to charity:
    1. Can be claimed above-the-line.
    2. Can be claimed only if your AGI falls below a specified level.
    3. Must be made by check or credit card.
    4. Must be substantiated by written statements.

 

  • A gift of appreciated property to charity is:
    1. Completely deductible
    2. Fully deductible up to 30% of your AGI.
    3. Fully deductible up to 50% of your AGI.
    4. d) Never deductible.

 

  • Beginning in 2013, you’ll be able to deduct unreimbursed medical expenses only to the extent that they exceed ____ of your AGI.
    1. 5%
    2. 5%
    3. 10%
    4. 5%

 

  • Mortgage interest paid on a loan to build a new home:
    1. Is always deductible.
    2. Is deductible on the first $100,000 of debt.
    3. Is deductible on the first $1 million of debt.
    4. Is never deductible.