Alicia is a single taxpayer with AGI of $350,000 and itemized deductions of $100,000 which are made up of $30,000 of mortgage interest,$30,000 of state income taxes and property taxes,and $40,000 of contributions to her temple.What is the amount of itemized deductions that Alicia may deduct on her 2013 income tax return after the phase-out for high-income taxpayers?

Question

Quizplus · Accepted Answer

For taxpayers with AGI over a certain amount, the total amount of itemized deductions is reduced by a certain percentage, which is known as the "Pease limitation." For 2013, the Pease limitation applies to single taxpayers with AGI over $250,000 and married taxpayers filing jointly with AGI over $300,000. For every $1 of AGI over the threshold amount, the total amount of itemized deductions is reduced by 3%, up to a maximum reduction of 80%.

In Alicia's case, her AGI is $350,000, which is $100,000 over the threshold amount. Therefore, her itemized deductions will be reduced by 3% of the amount over the threshold, which is $100,000.

$100,000 x 3% = $3,000

So Alicia's itemized deductions will be reduced by $3,000.

$100,000 - $3,000 = $97,000

Therefore, the amount of itemized deductions that Alicia may deduct on her 2013 income tax return after the phase-out for high-income taxpayers is $97,000.

Alicia Is a Single Taxpayer with AGI of $350,000 and Itemized