Jackie is in the 28% marginal tax bracket and has no other itemized deductions except those related to her home.If her standard deduction is $4,750 and she incurs the following costs related to housing,how much tax savings will she receive as a result of her home purchase?
A) $13,250
B) $ 5,040
C) $ 3,710
D) $ 2,800
E) none

Question

Jackie is in the 28% marginal tax bracket and has no other itemized deductions except those related to her home.If her standard deduction is $4,750 and she incurs the following costs related to housing,how much tax savings will she receive as a result of her home purchase? 
A) $13,250 
B) $ 5,040 
C) $ 3,710 
D) $ 2,800 
E) none

Quizplus · Accepted Answer

To calculate the tax savings, we need to compare the total itemized deductions related to housing to the standard deduction.

Total itemized deductions related to housing = mortgage interest ($9,000) + property tax ($2,500) = $11,500

Since $11,500 is greater than the standard deduction of $4,750, Jackie should itemize her deductions.

The tax savings will be the amount of itemized deductions multiplied by the marginal tax rate:

Tax savings = $11,500 x 0.28 = $3,220

Therefore, the closest answer is C) $3,710.

Jackie Is in the 28% Marginal Tax Bracket and Has