Question

Justin and Marina, who are married and will file a joint return, live in a state with no sales tax. However, they did pay the following taxes in 2019: State income tax, $4,500; State balance due for 2018, $1,300; Personal property taxes, $950; Real estate taxes, $4,000. How much are they eligible to deduct for taxes paid on Schedule A, Itemized Deductions

Answer 1

Justin and Marina

The amount they are eligible to deduct for taxes paid on Schedule A, Itemized Deductions is:

$9,450.

Step-by-step explanation:

a) Data and Calculations:

State income tax, $4,500

State balance due for 2018, $1,300

Personal property taxes, $950

Real estate taxes, $4,000

Allowed Itemized Deductions:

State income tax, $4,500

Personal property taxes, 950

Real estate taxes, 4,000

Total itemized deductions $9,450

b) For Justin and Marina, given the new TCJA in place in the tax years between 2018 and 2025 tax, itemizing deductions may not pay off for them as their total itemized deductions are significantly lower than the standard deduction for married filing jointly. They should elect to take the standard deduction instead of itemizing their deductions.