Question

Your dear cousin - who is 30 years old, single, no kids, and a restaurant manager...

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
Prescription drugs 250
Dentist 2,250
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.

Medical Deductions
Taxes
Interest
Charitable Deductions
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.)

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Answer #1
AGI $57400
Medical insurance premiums 1900 ID
Prescription drugs 250 ID
Dentist 2,250 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
Limit Eligible
Medical Deductions = 57400*10% = 5740 5,485
Taxes 3,900
Interest 4,800
Charitable Deductions = 57400*50% = 28700 2,050
Miscellaneous Itemized Deductions = (57400*2%) = In excess of $1,148 0
Total Itemized Deductions 16,235
Standard Deductions 12000
Itemized deductions is used
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