Question

Dan has AGI of 50,000 and paid the following taxes during this tax year:

State income withholding2,270
State income tax estimated payments925
Federal Income tax withholding3,620
Social Security tax withheld from wages2,110
State excise tax on liquor830
Automobile license (based on the car's weight)660
State sale tax paid925

Required:
Calculate how much Dan can deduct for taxes as an itemized deduction this year.

Answer 1

$4,120

Step-by-step explanation:

Only state income taxes paid and withheld are deductible, although Dan can opt to deduct state sales tax in lieu of state income tax.

Deductibles:

= State income withholding + State income tax estimated

= 2,270 + 925

= $3,195

Maximum deduction can include sales tax:

= Deductibles + State sale tax

= 3,195 + 925

= 4,120