Question

answer based on new tax bill 2018

For calendar year 2019, Jon and Betty Hansen (ages 59 and 60) file a joint return reflecting AGI of $280,000. They incur the following expenditures: Medical expenses before 10%-of-AGI floor Casualty loss caused by electrical fire in their home Interest on home mortgage Interest on credit cards Property taxes on home Charitable contributions State income tax Tax return preparation fees What is the amount of itemized deductions the Hansens may claim? $30,000 30,000 11,000 800 13,000 17,000 15,000 1,200

Answer 1

For the medical expenses the taxpayers are allowed $2,000 [$30,000 -(10%*$280,000 AGI)].

The casualty loss must be first reduced by $100 and then by $28,000 (10% *$280,000 AGI). Thus only $1900 ($30,000-$28,100(100+$28,000) can be deducted.

The tax return preparation fees miscellaneous itemized deductions subject to 2% floor. The floor of $5,600 (2%*$280,000 AGI) reduces $1200 to $0.

The hansens are not subject to overall limitation on certain itemized deductions because their AGI does not exceed $ 300,000 threshold for joint filers.

The itemized deductions total $58,900 ($10,000 mortgage interest +$ 13,000 property tax+ $17,000 contributions+$15,000 state income tax +$2,000 medical + $1,900 casualty)