Question

# For calendar year 2020 Matt and Lauren, ages 40 and 39, and both secondary school teachers,...

1. For calendar year 2020 Matt and Lauren, ages 40 and 39, and both secondary school teachers, file a joint return reflecting AGI of \$280,000. They incur the following expenditures:

Medical expenses (before the 7.5% of AGI limitation) \$30,000

State and local income taxes                                          15,000

State sales tax                                                     1,300

Real estate taxes on their home                               13,000

Home mortgage interest                                          11,000

Automobile loan interest                                              750

Credit card interest                                             1,000

Charitable contributions                                          17,000

Casualty loss caused by an electrical fire in their home       30,000

Tax return preparation fee                                         1,200

Supplies for use in the classroom (not reimbursed)                         500

Calculate their allowable itemized deductions for the year.

 Particulars Amount Itemized Deduction Medical Expenses Before AGI Floor \$30,000 Less: 10 % of AGI (280000) -\$28,000 \$2,000 Casuality Loss \$30,000 Less: -\$100 Less: 280000*10% -\$28,000 \$1,900 Interest on Home Mortgage \$10,000 \$10,000 Property Taxes on Home \$13,000 \$13,000 Charitable Contribution: (limited upto 50% of AGI) \$17,000 \$17,000 State Income Tax \$15,000 \$15,000 Tax Preparation Fees \$1,200 Less: 2% of AGI (2%*280000) = 5600 Limited to 1200 -\$1,200 \$0 Itemized Deduction \$58,900

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