Paul,a calendar year married taxpayer,files a joint return for 2015.Information for 2015 includes the following: AGI $175,000 State income taxes 13,500 State sales tax 3,000 Real estate taxes 18,900 Gambling losses (gambling gains were $12,000) 6,800 Paul's allowable itemized deductions for 2015 are:
A)$13,500.
B)$32,400.
C)$39,200.
D)$42,200.
E)None of the above.

Question

Quizplus · Accepted Answer

First, we add up all the itemized deductions: 
$13,500 + $3,000 + $18,900 + $6,800 = $42,200

However, since the AGI is $175,000 and the itemized deductions exceed the standard deduction for married filing jointly ($12,600 for 2015), we have to subtract the excess itemized deductions from the AGI to find the taxable income.

$175,000 - $42,200 = $132,800

Therefore, the allowable itemized deductions for 2015 are $39,200 ($132,800 - $93,600, which is the sum of the standard deduction and personal exemptions for married filing jointly).

Paul,a Calendar Year Married Taxpayer,files a Joint Return for 2015