Question

Donna and Brian are married and file a joint return and together have an Adjusted Gross Income of $180,000. Married filing jointly standard deduction is $24,800 for 2020. They own their home. They have the following itemized deductions: Should Donna and Brian itemize their deductions or use the standard deduction?

Medical Bills and Health Insurance	$26,000
Property tax	$1,250
Mortgage Interest expense	$5,500
State sales taxes	$7,000
Miscellaneous deductions	$3,600

Answer 1

Answer

Should Donna and Brian should use the standard deduction of $24800 as it is more than the Intemized deduction.

Analysis

Amount of deduction alloweed as per itemized dedudction-

1. Medicak expenses are allowed as deduction only if it is above 10% of Adjusted Total Income = $8000

Medical Bills and Health Insurance $26000

less Amount not allowed (180000*10%) $18000

Amount allowed as deduction $8000

2. States Sales taxes & Propert Taxes allowed to the Extent of $10000 or amount actually paid =$8250

3. Miscellaneous Deduction not allowed =$0.

4. Mortgage Interest     =$5500.

Total Itemized Deduction   $21750

Hence it is more beneficial to claim standard deduction of $24800