Question

Roberta Wilson is 63 years old and single. Her grandson, Jacob, is 9 years old and lived with her all year. Roberta paid all household expenses and Jacob qualifies as her dependent. Roberta and Jacob are both U.S. citizens and have valid Social Security numbers. Roberta claimed EIC for Jacob on her 2015 tax return, but he only lived with her for 2 months and the credit was disallowed. Roberta had wage income of $35,000 in 2018. She is not sure if she should itemize or take the standard deduction. Roberta paid the following: $7,200 mortgage interest for a qualified home purchased in 2010. In 2018, she took out a home equity loan for $8,000 to pay off her credit cards. She paid interest in the amount of $650 on this loan. $9,010 for real estate taxes. $1,762 for state income taxes withheld in 2018. Unreimbursed doctor bills in the amount of $2,200. Unreimbursed prescription drugs for $250. Health club dues of $600. A statement received from her church showing donations made throughout the year totaling $4,500. Receipts for donations of furniture and clothing in good, used condition to Goodwill. The total estimated fair market value is $500. $50 donated to a friend in need via their Go-Fund-Me account. $45 paid in 2018 on her 2017 balance due state income tax return. 32. If Roberta itemizes, what amount is she able to deduct for state income and real estate taxes?

A. $9,010 B. $10,000 C. $10,772 D. $10,817 If Roberta chooses not to itemize, how much is her standard deduction? A. $12,000 B. $13,600 C. $18,000 D. $19,600 Which of Roberta’s expenses qualify as itemized deductions on Schedule A? (Select all that apply.) A. $50 donated to a friend in need B. $45 state income tax paid in 2018 C. $7,200 mortgage interest on loan used to purchase home D. $650 interest on home equity loan used to pay off credit cards Roberta’s earned income credit was disallowed 2 years ago. How does that impact her 2018 tax return? A. There is no impact. B. She must file a Form 8862, Information To Claim Earned Income Credit After Disallowance, with her return. C. She is disallowed for 5 years. D. She is disallowed forever.

Answer 1

32	If Roberta itemizes, what amount is she able to deduct for state income and real estate taxes?
	Real Estate Taxes	$9,010
	State income taxes withheld in 2018	$1,762
	State income tax for 2017 paid in 2018	$45
	Total	$10,817
	As of Jan 1, 2018, maximum amount deductible under state income or sales tax is only $10,000
	B. $10,000
33	If Roberta chooses not to itemize, how much is her standard deduction?
	Standard deduction for single filer is $12000.
	A. $12000
34	Which of Roberta's expenses qualify as itemized deductions on Schedule A?
A	$50 donated to a friend in need
	IRS does not allow deduction for donation given to individual or individuals. It
	allows deduction only if it is given to charitable or not for profit organizations.
	Thus this does not qualify
B	$45 state income tax paid in 2018
	State income tax is deductible when paid. Thus this qualify for deduction
C	$7200 mortgage interest on loan used to purchase home.
	Interest on mortgage loan is deductible on Schedule A. Thus this also qualify
D	$650 Interest on home equity loan used to pay off credit cards.
	Interest on home equity loan is deductible only if used to buy, build or substantially
	improve the home on which the loan is taken otherwise it is non-deductible.
	In this Roberta is using the home equity loan to pay off credit cards, thus the interest
	is non-deductible.
	Thus this will not qualify
35	Roberta's earned income credit was disallowed 2 years ago. How does this impact her
	2018 tax return.
B.	She must file Form 8862, Information to claim Earned income credit after Disallowance,
	with her return
	Earlier it was disallowed on the ground that he only lived with her for 2 months. But now
	he lived with her all the year, so she can file form 8862