Your dear cousin - who is 30 years old, single, no kids, and a restaurant manager - heard that you are completing a course in Federal Income Tax Accounting at Henderson State University. She has asked you for help in preparing her 2018 tax return.
Additionally, she gave you the following list of what she considers to be "deductions." If the item is potentially a FROM AGI deduction, enter ID (for itemized deduction). If it not deductible, enter ND.
|Medical insurance premiums||$1,900|
|Emergency room fee||885|
|Cold pills, aspirin, and other OTC meds||120|
|Rental fee for crutches||80|
|Real estate taxes||1,600|
|State income taxes||2,300|
|Home mortgage interest||4,800|
|Credit card interest||1,375|
|Charitable contributions to church||2,050|
|Gambling losses ($0 in winnings)||300|
Taking into consideration limitations on itemized deductions and a total AGI of $57,400, determine the total deductible items under each major category of itemized deductions. Type the amounts using commas and positive numbers.
|Miscellaneous Itemized Deductions|
Therefore, total itemized deductions are .
To minimize your cousin's tax liability, will you use itemized deductions or the standard deduction as her FROM AGI deductions? (Type itemized or standard in the blank provided.)
|Medical insurance premiums||1900||ID|
|Emergency room fee||885||ID|
|Cold pills, aspirin, and other OTC meds||120||ID|
|Rental fee for crutches||80||ID|
|Real estate taxes||1,600||ID|
|State income taxes||2,300||ID|
|Home mortgage interest||4,800||ID|
|Credit card interest||1,375||No|
|Charitable contributions to church||2,050||ID|
|Gambling losses ($0 in winnings)||300||No|
|Medical Deductions||= 57400*10% = 5740||5,485|
|Charitable Deductions||= 57400*50% = 28700||2,050|
|Miscellaneous Itemized Deductions||= (57400*2%) = In excess of $1,148||0|
|Total Itemized Deductions||16,235|
|Itemized deductions is used|
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