Alicia is a single taxpayer with AGI of $350,000 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 2014 income tax return after the phase-out for high-income taxpayers?

Question

Quizplus · Accepted Answer

The itemized deduction phase-out for high-income taxpayers in 2014 begins at $305,050 for single taxpayers. Alicia's AGI is $350,000, which exceeds this threshold by $44,950. This excess is divided by $2,500 and rounded up to the nearest whole number to determine the reduction to her itemized deductions. In this case, the reduction is $18, which means that Alicia's itemized deductions are reduced to $99,982. Since her total itemized deductions are less than her standard deduction of $100,000, she should take the standard deduction instead. Therefore, the amount of itemized deductions that Alicia may deduct on her 2014 income tax return after the phase-out for high-income taxpayers is $97,126 ($100,000 - $2,874). The answer is B.

Alicia Is a Single Taxpayer with AGI of $350,000 and Itemized