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)$33,000State and local income taxes4,800State sales tax1,300Real estate taxes6,000Home mortgage interest5,000Automobile loan interest750Credit card interest1,000Charitable contributions7,000Casualty loss (before 10% limitation but after $100 floor; not in aFederally declared disaster area)34,000Unreimbursed employee business expenses7,600Calculate Linda's allowable itemized deductions for the year.х.

Itemized deductions are expenses that taxpayers can subtract from their adjusted gross income (AGI) in order to lower their taxable income. Taxpayers who choose to itemize their deductions on their federal income tax returns can deduct the total amount of eligible expenses that they incurred throughout the tax year, subject to certain limitations. Hence, Linda's allowable itemized deductions for the year is $34,000.(1) The local and state tax (SALT) deduction was capped at $10,000 under the Tax Cuts and Jobs Act (TCJA) of 2017. This means that taxpayers who itemize their deductions on their federal income tax returns can only deduct up to $10,000 in state and local income, sales, and property taxes combined. (2) Prior to the Tax Cuts and Jobs Act (TCJA) of 2017, taxpayers who itemized their deductions on their federal income tax returns could deduct certain unreimbursed employee expenses, such as job-related travel, education, and equipment, subject to certain limitations. However, under the TCJA, the deduction for unreimbursed employee expenses is no longer available for tax years 2018 through 2025. (3) Under the Tax Cuts and Jobs Act (TCJA) of 2017, for tax years 2019 and 2020, taxpayers could deduct medical expenses that exceeded 7.5% of their adjusted gross income (AGI). In order words, any amount of medical expenses met beyond the limit can be claimed as deduction. (4) Under the TCJA, for tax years 2018 through 2025, the deduction for casualty losses is limited to losses that are attributable to a federally declared disaster. In other words, taxpayers can only deduct casualty losses that occur in a designated disaster area and that are not reimbursed by insurance or other means.

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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) State and local income taxes State sales tax Real estate taxes Home mortgage interest Automobile loan interest Credit card interest Charitable contributions Casualty loss (before 10% limitation but after $100 floor; not in a Federally declared disaster area) Unreimbursed employee business expenses Calculate Linda's allowable itemized deductions for the year. X. $33,000 4,800 1,300 6,000 5,000 750 1,000 7,000 34,000 7,600

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) State and local income taxes State sales tax Real estate taxes Home mortgage interest Automobile loan interest Credit card interest Charitable contributions Casualty loss (before 10% limitation but after $100 floor; not in a Federally declared disaster area) Unreimbursed employee business expenses Calculate Linda's allowable itemized deductions for the year. X. $33,000 4,800 1,300 6,000 5,000 750 1,000 7,000 34,000 7,600

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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