Tasneem, a single taxpayer has paid the following amounts in 2016: $$\begin{array} { l l }
\text { State income taxes } & \$ 10,000 \
\text { Property taxes on home } & 4,000 \
\text { Mortgage interest on home } & 12,000 \
\text { Charitable contributions } & 14,000
\end{array}$$ Tasneem's AGI is $361,400. What is her net itemized deduction allowed?
A) $40,000
B) $38,800
C) $36,940
D) None of the above.

Question

Tasneem, a single taxpayer has paid the following amounts in 2016: $$\begin{array} { l l } 
\text { State income taxes } & \$ 10,000 \
\text { Property taxes on home } & 4,000 \
\text { Mortgage interest on home } & 12,000 \
\text { Charitable contributions } & 14,000
\end{array}$$ Tasneem's AGI is $361,400. What is her net itemized deduction allowed?
A) $40,000
B) $38,800
C) $36,940
D) None of the above.

Quizplus · Accepted Answer

In 2016, itemized deductions are subject to a phase-out for high-income taxpayers. The phase-out threshold for single filers is $259,400. Tasneem's AGI exceeds this by $102,000. The phase-out reduces itemized deductions by 3% of the excess AGI over the threshold. Her total deductions before phase-out are $40,000. The reduction is 3% of $102,000, which is $3,060. Therefore, her net itemized deductions are $40,000 - $3,060 = $36,940.

Tasneem, a Single Taxpayer Has Paid the Following Amounts in 2016