Out of Scope:
- Unreimbursed business expenses requiring form 2106 (but see below)
- Moving expenses (Form 3903) unless certified for Military
- Casualty and theft losses (See note below)
- Total contributions exceed 20% of AGI
- Donations of capital gain property
- Contribution of Motor Vehicles, Boats or Airplanes over $500(Form 1098-C)
- Total non-cash contributions of more than $5,000 (VITA is limited to $500)
- Property donated that was previously depreciated
- Property only partially owned by the taxpayer
- Charitable contribution carryover
- Mortgage Credit Certificate (MCC) mortgage interest paid (Form 8396)
- Investment interest paid (Form 4952)
- Foreign taxes that do not qualify for foreign tax credit
Tax Slayer entry:
Federal Section > Deductions > Itemized Deductions
Medical and Dental Expenses:
- Only the amount actually paid by the taxpayer can be deducted if they received a PTC (Premium Tax Credit) for an ACA Marketplace policy. If they receive a PTC when filing their return, that is a reimbursement for what they have paid and must be subtracted from what they have paid to obtain the deductible amount. Advanced PTC (APTC) has no effect since that goes directly to the provider.
- Premiums paid from an HSA are not deductible on Schedule A unless they are for Long-term care insurance, coverage under COBRA, while receiving unemployment compensation, or Medicare and other health care coverage if 65 or older (other than a Medicare supplemental policy, eg: Medigap).
- For specific items, see the Medical Expense Checklist.
Long Term Care:
- Long term care premiums are limited as a deduction by age. Tax Slayer calculates the deductible amount. Note: TaxSlayer is not currently limiting the deduction as it should!
- See the HSA page for limit details.
- If there are long term care premiums paid, there is also a Colorado credit that may be applicable.
Taxes You Paid:
State Sales Tax:
- Some cities are in more than one county – choose the right one when using the CO Sales Tax Table! If not within the city limits, use the county rate only.
- For 2016 TaxSlayer entry:
- A-C codes used in the Sched A tax form instructions are derived from the zip code. ☣ SOFTWARE ERROR – this is not always correct for your taxpayer’s address if the zip code covers locations with different codes (e.g. outside of city limits). Instead of using the taxpayer’s zip code, use another zip code that gives the correct code. How do I know?
- Add any non-reportable (non-taxable) income in the field provided. This can result in a higher deduction.
- Add the sales tax on a new vehicle (car, boat, plane) which is also deductible and adds to the regular sales tax amount.
- For 2015 TaxSlayer entry:
- A-C codes used on the tax forms are entered by selecting the taxpayer’s city/county option.
- You can skip the State General Sales Tax entry (It’s ignored for CO).
- The sales tax on a new vehicle (car, boat, plane) is also deductible and adds to the regular sales tax amount.
- There is no ability to add non-reportable (non-taxable) income received. Use the Sales Tax worksheet to determine income to be used with the IRS Sales Tax Calculator if such income is received.
- If the state sales tax is just slightly smaller than the income tax withheld, it may be to the taxpayer’s advantage to override the automatic decision and use the sales tax. The difference in added tax to the Feds may be offset by a greater savings on the CO state tax.
Property Tax websites:
- If the client does not have their property tax documents with them, you can get the information from their county tax web site (change icon list):
⇐ Click on the map to add your counties.
Mortgage Interest and Expenses
- Mortgages after 10/13/1987 are limited to $500,000/$1,000,000 to buy, build or improve home, before that, no limit.
- Limits apply to total of mortgages for main and secondary homes.
- If not to buy, build or improve, an additional limit after 10/13/1987 is $100,000 (i.e. a second mortgage).
- Mortgage late payment charges are deductible as part of the mortgage interest.
Mortgage Insurance Premium:
- This deduction, available through 2016, expired and is not available in 2017 and later years.
Gifts to Charity
- In a standard vs itemized borderline situation, it may be better to take the standard deduction and use charitable contributions on the state return. See Federal Section > Deductions > Compare Deductions TS page to see the two amounts.
- For contributions paid directly from an IRA as a Qualified Charitable Distribution (QCD), see the Form 1099-R page on reducing taxable amount from the IRA distribution. Do not also include on Schedule A.
- All contributions must have written documentation: cancelled checks, or a recipient’s statement. (We don’t have to see them.)
- Any single non-cash contribution over $250 must have a written statement from the organization stating whether goods or services were provided in return for the contribution – only the net amount is deductible if so.
- If the total non-cash contributions exceeds $500, Form 8283 is required (a Tax-Aide exception to Pub 4012). Section A Part II and all of Section B are OUT OF SCOPE .
- Total non-cash contributions over $5,000 is OUT OF SCOPE
- Clients should have figured the value of non-cash contributions. If the list is small or you have concerns with an estimate, you can visit the Salvation Army or Goodwill website for typical item values:
- Up to $50/month is deductible for foreign student housing expenses.
- Foster child unreimbursed expenses is deductible.
Unreimbursed Employee Business Expense:
- If any business expenses WERE reimbursed by the employer or if expenses involve travel, transportation, meals or entertainment, form 2106 is required. OUT OF SCOPE unless certified for Military.
- For AARP, business expenses NOT reimbursed by the employer are IN SCOPE using form 2106.
- ⚠ CAUTION :Gambling losses are not compared with gambling winnings. Do not enter more as a deduction than the total of the winnings.
Less Common Deductions:
- Casualty losses are OUT OF SCOPE . However, since the amount the client can deduct on Schedule A must be reduced by a “non-deductible” amount, if the loss is less than that non-deductible amount, we can still do the return because there will be none for the client to deduct.
- The non-deductible amount is $100 + 10% of the AGI.
- See the casualty loss screening flowchart to determine if we can do the return.