Question

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

State income tax withholding $ 1,600
State income tax estimated payments 980
Federal income tax withholding 3,400
Social Security tax withheld from wages 2,180
State excise tax on liquor 540
Automobile license (based on the car’s weight) 370
State sales tax paid925

Calculate the amount of taxes Dan may include in his itemized deductions for the year.

Answer 1

The correct answer before state sales tax is $2,580, but if he opt for state sales tax than the answer is $3,505.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the amount that Dan may include in his itemized deduction by using following formula:

Amount for itemized deduction = State income tax withholding + State income tax estimated payments

By putting the value, we get

Amount for itemized deduction = $1,600 + $980

= $2,580

He can also opt for state sales tax, so after state sales tax

Amount for itemized deduction = $2,580 + $925 = $3,505