Question 1

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?

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).

Question 2

Pat has a dependent daughter and files as head of household. She has AGI of $376,000. What percentage of the $4,050 personal exemption and $4,050 dependency exemption may she deduct on her 2016 income tax return?

Accepted Answer

The answer of Pat has a dependent daughter and files...

Question 3

Ellen and Rick are married with one dependent child. They have AGI of $355,300, and itemized deductions consisting of $20,000 state income taxes and $20,000 medical expenses, after applying the 10 percent of AGI limitation.
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Compute the following for 2016:
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a.Itemized deductions allowed after the phase-out for high-income taxpayers.
b.Exemption deductions (ordinarily $4,050 x 3) after the high-income phase-out.
c.Taxable income.

Accepted Answer

The answer of Ellen and Rick are married with one...

Quiz 5: Itemized Deductions and Other Incentives

Pat has a dependent daughter and files as head of household. She has AGI of $376,000. What percentage of the $4,050 personal exemption and $4,050 dependency exemption may she deduct on her 2016 income tax return?