Georgia Assessments for the Certification of Educators GACE Practice Test

When itemizing deductions on a federal tax return, an individual taxpayer may be able to deduct all but which of the following?

1. Charitable donations

2. Groceries

3. Interest paid on a mortgage

4. Losses from theft

The correct answer is: Groceries

Itemizing deductions on a federal tax return allows taxpayers to reduce their taxable income through specific expenses recognized by the Internal Revenue Service (IRS). Charitable donations, interest paid on a mortgage, and losses from theft are all potential deductions that can be itemized. Charitable donations allow taxpayers to claim deductions for contributions made to qualified organizations. Interest on a mortgage is generally fully deductible, up to specified limits based on the amount of the mortgage and the year in which the loan was taken. Losses from theft can also be deducted, providing certain criteria are met, especially relating to the loss amount exceeding a specific threshold or being associated with a federally declared disaster. On the other hand, groceries are considered personal living expenses and are not deductible when itemizing deductions. This distinction reflects the IRS's position that daily living expenses, such as food, are non-deductible and should typically be covered by a taxpayer's regular income.