Question

1) Which of the following is NEVER deductible on Schedule A?

A) Home mortgage interest paid on a second home.

B) Interest paid on money borrowed to buy stock for an investment portfolio.

C) "Points" paid in advance at the time of securing a mortgage for a taxpayer's main residence.

D) Credit card interest paid on personal purchases

2) A self-employed taxpayer may be eligible to deduct amounts paid for medical insurance for themselves and for their families. To claim this deduction, a qualifying taxpayer should:

A) Deduct the cost of the health insurance premiums as a business expense on Schedule C.

B) Only deduct the health insurance costs on Schedule A if they itemize their deductions.

C) Claim a nonrefundable tax credit based on the cost of the insurance.

D) Include the costs as an adjustment to income on Schedule 1 (Form 1040), up to the amount of net business income.

Answer 1

1.  D) Credit card interest paid on personal purchases

For Individual taxpayers, Schedule A is used in co-occurrence with From 1040 to report the itemized deduction and some of the itemized deductions are given below

- The mortgage interest paid, can deduct qualified mortgage interest on your main and a second home.

- Deductible investment interest, can deduct the interest on the loan borrowed to invest.

- Points" paid in advance at the time of securing a mortgage for a taxpayer's main residence.

Credit card interest paid on personal purchases is never deductible on Schedule A.

2.  D) Include the costs as an adjustment to income on Schedule 1 (Form 1040), up to the amount of net business income.