Question

Problem 10-39 (LO. 2, 3, 4, 5, 6, 7) Linda, who files as a single taxpayer, had AGI of $280,000 for 2020. She incurred the following expenses and losses during the year: Medical expenses (before the 7.5%-of-AGI limitation) $33,000 State and local income taxes 4,800 State sales tax 1,300 Real estate taxes 6,000 Home mortgage interest 5,000 Automobile loan interest 750 Credit card interest 1,000 Charitable contributions 7,000 Casualty loss (before 10% limitation but after $100 floor; not in a Federally declared disaster area) 34,000 Unreimbursed employee business expenses 7,600 Calculate Linda's allowable itemized deductions for the year. $fill in the blank 1 .

Answer 1

Answer: $34,000

Step-by-step explanation:

As of the Tax Cuts and Jobs Act of 2017, Unreimbursed employee business expenses and Casualty loss can no longer be deducted.

Linda's itemized deductions are:

= Medical expenses + State and local taxes + Home mortgage interest + Charitable contributions.

Medical expenses after 7.5% of AGI limitation:

= 33,000 - (7.5% * 280,000)

= $12,000

State and local taxes have a maximum deduction of $10,000.

Linda's allowable itemized deductions for the year:

= 12,000 + 10,000 + 5,000 + 7,000

= $34,000