Health & Fitness
Real Life Questions!
Here are some real life questions your neighbors have asked about their taxes!
We needed to enlarge our bathroom and install supports so our physically challenged daughter could continue to live with us. Is this deductible?
Yes!! You can deduct changes such as ramps, wider doorways, railings, support bars, kitchen, bathroom and other modifications for a challenged family member who is on your return. The amounts go on the Schedule A as medical expenses. Some modifications are very expensive, such as adding an elevator, and may increase the value of your home. Here the deduction is limited by the amount your home value increases. The IRS has a worksheet to help you figure out the correct amount.
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Is workmen’s compensation taxable?
No!! You do not need to add it to your federal income. However, if you apply for a Minnesota Property Tax Refund or some other MN credits you will need to add it to total household income.
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Do I need to report my last year’s Minnesota refund on my federal tax return?
Sometimes!! You do not need to report your Minnesota refund on your federal tax return if you 1) did not itemize this year or 2) did not itemize last year or 3) when you itemized last year claimed state sales tax on your Schedule A instead of the state income tax. If you did itemize last year using the Schedule A and claimed your state income tax as a deduction you may need to report your refund on line 10 of your 1040. Otherwise it is like double dipping. The IRS provides the Recovery Worksheet to help you determine the correct amount. Remember that whatever amount you put on line 10 of the 1040 needs to go on line 5 of your Minnesota state return. That way it will be subtracted from your Minnesota income and you will not pay state taxes on it twice. Confusing? That’s taxes!! Just be sure not to include your Minnesota refund on your tax return unless you need to.
Do you have other tax questions? Contact John and Mary Lawless at www.taxteam1.com or at 651-343-0234. Enjoy the warm weather!