Final answer:
The statement regarding the deduction limit for charitable contributions is true, but the one about casualty losses on personal assets is false as the losses must exceed ten percent of AGI after a $100 reduction. Tax rules can be complex and subject to change.
Step-by-step explanation:
The statement that the deduction for cash charitable contributions is limited to twenty-five percent of the taxpayer's adjusted gross income (AGI) is true. However, the assertion that casualty losses on personal assets are only deductible to the extent the losses exceed ten percent of the taxpayer's AGI is false. In fact, for casualty losses to be deductible, they must exceed $100 and the sum of all your casualty or theft losses must exceed ten percent of your AGI.
The rules governing specific deductions within the US federal tax code are very complex and subject to change. Taxpayers must look at the specific provisions that apply to the tax year in question. For instance, the rules for deductions can differ based on legislative changes or specific tax relief provisions enacted after natural disasters.
Understanding the basic concept of taxation, such as how to calculate taxable income, is essential. Taxable income is determined by subtracting the sum of the standard deduction and any personal exemptions from your adjusted gross income. These are the basic principles that underpin the filing of tax forms, whether it is the simplified 1040EZ or more complex forms.