Question

Cecelia, a single taxpayer, has adjusted gross income for the current year of $80,000. Cecelia pays the following amounts during the current year:

Mortgage interest on residence

$5,500

Interest on car loan

500

Credit card interest

600

Property taxes on residence

2,500

State income tax withheld from wages

3,400

Federal income tax withheld from wages

9,500

FICA taxes withheld from wages

6,120

Cash contributions to the Salvation Army

800

Donation of clothes to Goodwill (Value = $400; Cost =$1,500)
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What is the amount of Cecelia's total itemized deductions?

Answer 1

Cecelia's total itemized deductions amount to $12,600, comprising mortgage interest, property taxes, state income tax, and charitable contributions including cash and the lower of the cost or fair market value of donated goods.

Step-by-step explanation:

To calculate Cecelia's total itemized deductions, we must identify which expenses are deductible on her federal income tax return. Deductible expenses include mortgage interest on her residence, property taxes on her residence, state income taxes, charitable contributions, and the donated goods to Goodwill, because they are considered charitable donations. Certain other expenses, such as interest on car loans, credit card interest, federal income tax, and FICA taxes, are not deductible.

The total of Cecelia's itemized deductions would be:

• Mortgage interest: $5,500
• Property taxes: $2,500
• State income tax: $3,400
• Cash contributions to Salvation Army: $800
• Donation of clothes to Goodwill (lesser of value or cost): $400

Adding these amounts gives us Cecelia's total itemized deductions of $12,600.