Individual Taxation Diagram:
GI
< Adjustment>
= AGI
<Std Ded>
OR
<Itemized Ded>
<Exemptions>
=Taxable Income
Adjustments = Above the Line Deductions [ATLD]
Itemized Deductions or ID = Below the Line Deductions [BTLD]
ATLD:
MISSHAPED-BAT
M – Moving Expenses
I – IRA
S –Student Loan Interest Expenses
S – Self-Employed “FReSH” => FICA; Retirement; E; SEP/SIMPLE/, &Qualified Plans; Health Insurance Reduction *
H – Health Savings Account [HSA]
A – Alimony Paid
P – Penalty on Early Withdrawal of Savings
E – Educator Expenses (expired 12/31/2013)
D – Domestic Production Activities Deduction
B – Business Expenses of “RAG” => Reservists; Performing Artists; G-Govt=Fee-Basis Government Officials
A – Attorney Fees Paid in Certain Discrimination and Whistle-Blower Cases
T – Tuition & Fee Deduction (expired 12/31/2013)
ID = BTLD
7 [COMETIC]
C – Charitable Contributions
O – OMD [Other Miscellaneous Deductions]
M – MADE [Medical and Dental Expenses]
E – Employee Expenses (unreimbursed employee expenses) *
T – Taxes Paid
I – Interest Paid
C – Casualty or Theft Losses
*Employee Expenses / Miscellaneous Itemized Deductions (2% AGI test)
Deductible:
10 [oUTCHARGEES]
O –
U – Uniforms
T – Tax Preparation Fees
C – Convenience Fees (Debit Card) to pay income tax
H – Home => Business Use of Home =>exclusive use/for the employer’s convenience
A – Agency => Employment Agency Fees => deductible for a new job in the same profession; not deductible for a first job or entirely new profession
R – Reimbursement => Unreimbursed Business Expenses#
G – Gifts/Business Gifts => $25 per recipient per year
E – Educational Expenses => do not confuse with educational interest expense; those not deducted above AGI; to maintain or improve the skills; meet the express requirements of the individual’s employer for retention of this job
E – Expense of Investors => Safe deposit box and Investment advice
S – Subscriptions to professional journals
#Unreimbursed Items that May be Deducted:
1) Travel, Meals & Lodging (overnight business travel)
2) Transportation expenses (100% deductible) => Includes both out-of-town and local travel & automobile expenses. Standard mileage allowance for 2014 is $0.56 per mile;
3) Meals/Entertainment Expenses (50% deductible)
Must be directly related to or associated with active conduct of a trade or business
.