Deductions & Credits

The Unified Tax Credit combines the credit for the federal gift tax and the federal estate tax into a single lifetime credit. It directly offsets the tax calculated on a taxpayer's "Basic Exclusion Amount." For 2025, the basic estate and gift tax exclusion (exemption) amount is $13,990,000 per individual. A married couple has a combined exclusion of $27,980,000. The actual Unified Tax Credit (the dollar amount of tax forgiven on that $13.99 million exclusion) for 2025 is $5,541,800. For addition

The Unified Tax Credit combines the credit for the federal gift tax and the federal estate tax into a single lifetime credit. It directly offsets the tax calculated on a taxpayer's "Basic Exclusion Amount." For 2025, the basic estate and gift tax exclusion (exemption) amount is $13,990,000 per individual. A married couple has a combined exclusion of $27,980,000. The actual Unified Tax Credit (the dollar amount of tax forgiven on that $13.99 million exclusion) for 2025 is $5,541,800. For addition

The Unified Tax Credit combines the credit for the federal gift tax and the federal estate tax into a single lifetime credit. It directly offsets the tax calculated on a taxpayer's "Basic Exclusion Amount." For 2025, the basic estate and gift tax exclusion (exemption) amount is $13,990,000 per individual. A married couple has a combined exclusion of $27,980,000. The actual Unified Tax Credit (the dollar amount of tax forgiven on that $13.99 million exclusion) for 2025 is $5,541,800. For addition

Only Paulie would be eligible for the AOTC. Paulie is in his first year of college and enrolled at least half-time for one academic period. The other students listed would not qualify. Shelly does not qualify because she has already claimed the credit for 4 years. Timmy would not qualify because he is not a degree candidate. And Abram would not qualify because he has a felony drug conviction. Topic: 26-27EA Part 1 -Section 3-Deductions and Credits

A taxpayer can deduct mortgage interest on a main home and a second home as an itemized deduction. A home can be a house, cooperative apartment, condominium, mobile home, house trailer, or houseboat that has sleeping, cooking, and toilet facilities. Homeowner dues are not deductible. Topic: 26-27EA Part 1 -Section 3-Deductions and Credits

The Premium Tax Credit is designed to make health insurance premiums more affordable. The Premium Tax Credit is based on a taxpayer’s estimated household income. The credit amounts are paid directly to the taxpayer’s health insurance provider every month. Topic: 26-27EA Part 1 Mock Exam 1

Under the “optional method” of calculating the home office deduction, a taxpayer can deduct $5 per square foot for the space in the home that is used for business, with a maximum allowable square footage of 300 square feet. Therefore, the maximum deduction is $1,500. The criteria for who qualifies for the deduction remains the same, but the calculation and recordkeeping requirements have been simplified. There is no depreciation expense and no recapture of depreciation upon the sale of the home.

Eligible taxpayers can deduct up to 20% of their Qualified Business Income (QBI) from pass-through entities like sole proprietorships, partnerships, and S corporations. Certain types of income are excluded from the QBI deduction under Section 199A. For example, hobby income and interest income does not qualify for the deduction because they are not considered ordinary business income. Learn more about the Qualified Business Income Deduction. Topic: 26-27EA Part 1 -Section 4-Taxation

The veterinary care for Norman's service animal is deductible as a medical expense on Schedule A. Norman can include in medical expenses the costs of buying, training, and maintaining his guide dog. To learn more about what qualifies as a deductible medical expense, see IRS Topic No. 502 Medical and Dental Expenses. Topic: 26-27EA Part 1 -Section 3-Deductions and Credits

Under current law, most C corporations must limit NOL deductions to 80% of taxable income in any given year. Topic: 26-27EA Part 2-Section 1-Business Entities and Considerations

Under current law, most C corporations must limit NOL deductions to 80% of taxable income in any given year. Topic: 26-27EA Part 2-Section 1-Business Entities and Considerations

For charity volunteers, transportation expenses can be deductible as an itemized deduction on Schedule A. Expenses include bus fare, parking fees, tolls, and either the cost of gas and oil or a standard mileage deduction for charitable activities. Raffle tickets (or any type of gambling expense) are never deductible as a charitable contribution, even if the event directly benefits a charity. Blood donations are not deductible, but the cost of travel to make a blood donation is a deductible expen

The purpose of the “other adjustments” section on Schedule 1 (Form 1040) is to claim more obscure adjustments to income that are not deducted elsewhere. The “other adjustments” section allows taxpayers to report various adjustments, such as: attorney fees and court costs for actions involving certain unlawful discrimination claims. Topic: 26-27EA Part 1-Section 2- Income and Assets

Property taxes paid on a personal residence are an itemized deduction, only deductible on Schedule A. The other answers are all deductions that are allowed as adjustments to income on Form 1040 if the taxpayer otherwise qualifies to take the deduction. Alimony paid is only deductible as an adjustment to income if the divorce decree or support agreement was finalized before January 1, 2019. Topic: 26-27EA Part 1 Mock Exam 2

The standard deduction is based primarily on filing status. The standard deduction is a specific dollar amount that reduces your taxable income. For the 2025 tax year, the standard deduction is $31,500 for joint filers, $23,625 for heads of household, and $15,750 for single filers and those married filing separately. For more information, see IRS Topic No. 551 Standard Deduction. Topic: 26-27EA Part 1 -Section 3-Deductions and Credits

Property taxes paid on a personal residence are an itemized deduction, only deductible on Schedule A. The other answers are all deductions that are allowed as adjustments to income on Form 1040 if the taxpayer otherwise qualifies to take the deduction. Alimony paid is only deductible as an adjustment to income if the divorce decree or support agreement was finalized before January 1, 2019. Topic: 26-27EA Part 1 Mock Exam 2

Property taxes paid on a personal residence are an itemized deduction, only deductible on Schedule A. The other answers are all deductions that are allowed as adjustments to income on Form 1040 if the taxpayer otherwise qualifies to take the deduction. Alimony paid is only deductible as an adjustment to income if the divorce decree or support agreement was finalized before January 1, 2019. Topic: 26-27EA Part 1 Mock Exam 2

The Premium Tax Credit is designed to make health insurance premiums more affordable. The Premium Tax Credit is based on a taxpayer’s estimated household income. The credit amounts are paid directly to the taxpayer’s health insurance provider every month. Topic: 26-27EA Part 1 Mock Exam 1

Under current law, most C corporations must limit NOL deductions to 80% of taxable income in any given year. Topic: 26-27EA Part 2-Section 1-Business Entities and Considerations

The Premium Tax Credit is designed to make health insurance premiums more affordable. The Premium Tax Credit is based on a taxpayer’s estimated household income. The credit amounts are paid directly to the taxpayer’s health insurance provider every month. Topic: 26-27EA Part 1 Mock Exam 1

An eligible educator must work at least 900 hours a school year in a school that provides elementary or secondary education (K-12). College instructors do not qualify. For the purposes of this credit, an “educator” may include a teacher, counselor, principal, classroom aide, or a school coach. Topic: 26-27EA Part 1-Section 2- Income and Assets

The unlimited estate tax marital deduction is only available if the surviving spouse is a U.S. citizen. The unlimited marital deduction allows an individual to transfer an unrestricted amount of assets to his or her spouse at any time, including at the death of the transferor, free from tax. This unlimited transfer is only available if the surviving spouse is a U.S. citizen. Topic: 26-27EA Part 1 -Section 6 - Speciaized Returns for Individuals

For the purposes of the foreign tax credit, property taxes are not creditable, because property taxes are not an income tax. U.S. taxpayers can claim a credit for foreign taxes that are imposed by a foreign country. Generally, only income taxes, war profits taxes, and excess profits taxes qualify for the foreign tax credit. Topic: 26-27EA Part 1 -Section 4-Taxation

The standard deduction is based primarily on filing status. The standard deduction is a specific dollar amount that reduces your taxable income. For the 2025 tax year, the standard deduction is $31,500 for joint filers, $23,625 for heads of household, and $15,750 for single filers and those married filing separately. For more information, see IRS Topic No. 551 Standard Deduction. Topic: 26-27EA Part 1 -Section 3-Deductions and Credits

For charity volunteers, transportation expenses can be deductible as an itemized deduction on Schedule A. Expenses include bus fare, parking fees, tolls, and either the cost of gas and oil or a standard mileage deduction for charitable activities. Raffle tickets (or any type of gambling expense) are never deductible as a charitable contribution, even if the event directly benefits a charity. Blood donations are not deductible, but the cost of travel to make a blood donation is a deductible expen

The Credit for Other Dependents, also called the Other Dependent Credit (ODC) is a credit that may reduce a taxpayer\'s tax liability by as much as $500 for each eligible dependent. This credit is nonrefundable. Topic: 26-27EA Part 1 -Section 3-Deductions and Credits

The Unified Tax Credit combines the credit for the federal gift tax and the federal estate tax into a single lifetime credit. It directly offsets the tax calculated on a taxpayer's "Basic Exclusion Amount." For 2025, the basic estate and gift tax exclusion (exemption) amount is $13,990,000 per individual. A married couple has a combined exclusion of $27,980,000. The actual Unified Tax Credit (the dollar amount of tax forgiven on that $13.99 million exclusion) for 2025 is $5,541,800. For addition

The standard deduction is based primarily on filing status. The standard deduction is a specific dollar amount that reduces your taxable income. For the 2025 tax year, the standard deduction is $31,500 for joint filers, $23,625 for heads of household, and $15,750 for single filers and those married filing separately. For more information, see IRS Topic No. 551 Standard Deduction. Topic: 26-27EA Part 1 -Section 3-Deductions and Credits

Taxpayers who are filing Married Filing Separately cannot claim deductions for the American Opportunity Credit, Lifetime Learning Credit, or the student loan interest deduction. They can claim the Foreign Earned Income Exclusion. The filing status, married filing jointly or separately, does not affect the amount of exclusion. Topic: 26-27EA Part 1 -Section 4-Taxation

For charity volunteers, transportation expenses can be deductible as an itemized deduction on Schedule A. Expenses include bus fare, parking fees, tolls, and either the cost of gas and oil or a standard mileage deduction for charitable activities. Raffle tickets (or any type of gambling expense) are never deductible as a charitable contribution, even if the event directly benefits a charity. Blood donations are not deductible, but the cost of travel to make a blood donation is a deductible expen

The Credit for Other Dependents, also called the Other Dependent Credit (ODC) is a credit that may reduce a taxpayer\'s tax liability by as much as $500 for each eligible dependent. This credit is nonrefundable. Topic: 26-27EA Part 1 -Section 3-Deductions and Credits

The Unified Tax Credit combines the credit for the federal gift tax and the federal estate tax into a single lifetime credit. It directly offsets the tax calculated on a taxpayer's "Basic Exclusion Amount." For 2025, the basic estate and gift tax exclusion (exemption) amount is $13,990,000 per individual. A married couple has a combined exclusion of $27,980,000. The actual Unified Tax Credit (the dollar amount of tax forgiven on that $13.99 million exclusion) for 2025 is $5,541,800. For addition