Question

Camilo is a self-employed roofer. He reported a profit of $30,000 on his Schedule C. He had other taxable income of $5,000. He paid $3,000 for hospitalization insurance. His self-employment tax was $4,656. He paid his former wife $4,000 in court-ordered alimony and $4,000 in child support. What is the amount Camilo can deduct in arriving at adjusted gross income (AGI)

Answer 1

$5,328

Step-by-step explanation:

Camilo can deduct 50% of self-employment taxes paid = $4,656 x 50% = $2,328

Since 2019, alimony is no longer tax deductible. Child support payments are not deductible either.

But self- employed can deduct health insurance premiums and that includes hospitalization insurance.

Total deductions = $2,328 + $3,000 = $5,328