Alicia is a single taxpayer with AGI of $338,400 and itemized deductions of $100,000 which are made up of $30,000 of mortgage interest, $30,000 of state income taxes and property taxes, and $40,000 of contributions to her temple. What is the amount of itemized deductions that Alicia may deduct on her 2016 income tax return after the phase-out for high-income taxpayers?

Question

Quizplus · Accepted Answer

Alicia's AGI exceeds the threshold for the phase-out of itemized deductions ($311,300 for single filers in 2016). The phase-out reduces itemized deductions by 3% of the excess of AGI over the threshold, subject to a maximum reduction of 80% of itemized deductions. In Alicia's case, her excess AGI is $27,100 ($338,400 - $311,300). 3% of $27,100 is $813, and since this amount is less than 80% of her itemized deductions ($80,000), her deductions are reduced by $813. Therefore, her total itemized deductions are $99,187 ($100,000 - $813).

Alicia Is a Single Taxpayer with AGI of $338,400 and Itemized