Mitch is in the 24% tax bracket. He may receive a different tax benefit for a $2,000 expenditure that is classified as a deduction from AGI than he will receive for a $2,000 expenditure that is classified as a deduction for AGI.

Question

Quizplus · Accepted Answer

Deductions from AGI (such as medical expenses or charitable contributions) provide a tax benefit regardless of whether a taxpayer itemizes deductions or takes the standard deduction. Deductions for AGI (such as contributions to traditional IRAs or 401(k) plans) reduce a taxpayer's taxable income, which can affect their tax bracket and the amount of tax they owe. Therefore, the tax benefit for a $2,000 expenditure can differ depending on whether it is classified as a deduction from or for AGI.

Mitch Is in the 24% Tax Bracket