The IRS Deductions Blog

Archive for March, 2008

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Question: Are property taxes on raw land deductible for a real estate business on form 1065?

I am filling form 1065 for my LLC which is a real estate investment and service company which currently holds raw land that is valued at approximately $1 Million. We have paid $10,000 in property taxes in 2008 and was wondering whether this expense would be considered deductable as a business expense?

Answer: A little complicated, and hard to answer without knowing more information.

If it is just held as an investment and doesn’t generate any income what you would do is actually capitalize the amount paid for taxes (which basically means add it to the basis of the land).

If your generating some revenue, such as rent or perhaps using the land for some kind of farming activity then you may offset the income with the property tax expense.

Hope this helps a little.

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Question: Is Student Loan Interest TAX DEDUCTIBLE?

is student loan interest tax deductible, the loans that are issued by the government through fafsa?

Answer: Student loan interest is technically an adjustment, not a deduction, but, essentially, the answer to the intent of your question is yes.

However, there are limitations on the amount of income you make as well as certain other points. Go here: http://www.irs.gov/pub/irs-pdf/p970.pdf

Page 28 covers student loan interest.

Good luck! :0)

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Question: Will I get a bigger tax refund if I deduct my medical expenses in addition to my education expenses?

My income is low (less than $35,000) because I got laid off in the early part of 2008. I went back to school in 2008 and paid $3900 in qualified education expenses. I also had $3500 in medical expenses, which is greater than 7.5% of my income so I should be able to use it as a deduction as well. If I deduct both my education and medical expenses, will I get a bigger refund than if I deducted only the education expenses?
I’m just trying to get an idea of how much my refund will be. When I use TurboTax’s online tax refund calculator, the result is the same whether I use just the Lifetime Learning credit or whether I use both the Lifetime Learning credit and deduct my medical expenses. When I use bankrate.com’s online tax refund calculator, I get a bigger refund by using both of them (i.e., the Lifetime Learning credit and the medical deduction). I’m so confused…

Answer: What else do you have to itemize? Of your $3500 of medical expenses, about $900 will show up on schedule A, but if that’s all you have, the standard deduction of $5450 is already more than that.

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Taxes: Last-Minute Help

Take heart, laggards, there is still time to cut your bill or boost your refund.

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Question: Is artwork purchased at a charity art auction or charity art show tax deductible?

Answer: There could be but you would need to show that the price you paid was greatly over the Fair Market Value. That would be hard unless the same item was available elsewhere for a fixed price which was less than what you were paying and that difference was going directly to the charity. You however would not be the first person to have written a check to the charity for a product and take the full amount as a deduction because it is written to a charity. This is rather common if you also have other gifts to the same charity such as a church.

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Question: Can medical / dental insurance costs including premiums paid PRE-TAX be tax deductible?

Can dental / health insurance premiums paid pre-tax and deducted from my paycheck be considered in itemized deduction?

Answer: yes they can, any medical expense including ones from your pretaxed income, can be added on the scedule a. the only exception would be if your employer paid for the insurance. if you pay for it, you can include it. i am a tax preparer and i am sure of this. now the only limit would be getting you over the thresehold of %2 of your agi.

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