In 2016,Mary had the following items:
Salary
$30,000
Personal use casualty gain
10,000
Personal use casualty loss (after $100 floor)
17,000
Other itemized deductions
4,000

Assuming that Mary files as head of household (has one dependent child),determine her taxable income for 2016.

Question

In 2016,Mary had the following items:
Salary
$30,000
Personal use casualty gain
10,000
Personal use casualty loss (after $100 floor)
17,000
Other itemized deductions
4,000
​
Assuming that Mary files as head of household (has one dependent child),determine her taxable income for 2016.

Quizplus · Accepted Answer

Personal use casualty losses are not deductible. Mary's taxable income is $30,000 - $10,000 (personal use casualty gain) - $4,000 (other itemized deductions) = $16,000. Since Mary files as head of household, her standard deduction is $9,300. Therefore, her taxable income is $16,000 - $9,300 = $6,700. However, the standard deduction for head of household filers is phased out for high-income taxpayers. Mary's AGI is $30,000 + $10,000 (personal use casualty gain) = $40,000. The phase-out begins at $50,200 for head of household filers. Therefore, Mary's standard deduction is reduced by $1 for every $2 of AGI over $50,200. Mary's AGI is $40,000, which is $10,200 over $50,200. Therefore, her standard deduction is reduced by $5,100 ($10,200 / 2). Mary's taxable income is $6,700 + $5,100 = $12,600.

In 2016,Mary Had the Following Items