Question

This year, Nancy, a single taxpayer, paid $12,300 of real estate taxes on her personal residence and $7,500 of state income taxes. Assuming Nancy itemizes her deductions, what amout can she deduct for taxes this year

Answer 1

$12,500

Step-by-step explanation:

Nancy can deduct both her real estate taxes and state income taxes from her gross income. This way, she will end up paying less federal income taxes. The exact amount that she saves depends on her tax bracket, which is not given.

Assuming Nancy doesn't take the standard deduction, she can deduct 100% of her state income taxes ($7,500) and up to $5,000 in real estate taxes since she is a single taxpayer. Her total deduction on these two items will be $12,500.