Latisha is a single person who makes $40,000 per year. This year she paid $2,000 in student loan interest, $1,500 in medical expenses, $7,200 in rent and $4,800 in car loan payments. She contributes $3,600 per year to her 401K plan at work. Give her some tax advice.

Question

Quizplus · Accepted Answer

Since Latisha has several deductions such as student loan interest, medical expenses, rent and car loan payments, it would be wise to calculate her taxes using both the standard deduction and itemized deduction methods to see which one provides a greater deduction. This will optimize her tax savings. Additionally, contributing to her 401K plan at work is a great way to reduce her taxable income, so she should continue to do so.

Latisha Is a Single Person Who Makes $40,000 Per Year