Question

1. Danielle is single (no other dependents) with wage income of $200,000. Danielle does not own a home, has state taxes paid of $14,500, and contributed $2,800 to charity. There are no other potential deductions. Danielle is debating whether to make a $3,000 contribution to her favorite charity, Special Olympics, or to use the $3,000 on a vacation to a warm climate (somewhere in Texas or Florida). Note the standard deduction for single in 2019 is 12,200.
   1. What will Danielle’s 2019 tax liability be if she makes the contribution?
   2. What will Danielle’s 2019 tax liability be if she does not make the contribution?   
   3. What would you recommend to Danielle concerning this issue?

Can you please show explanation

Answer 1

Standard Deduction cuailable to Danielle is 12,200 Amount ot itemiged deduction if Danielle decides to make ihe contributimn 14,500 t 2,000 t 3000 20,300 Danielle can either opt tor Standard Deduction er iteniged deductions but net beth Amount of itemiged deductien if Danielle do met make contribuluen to Special 0lympic 14500't 2,800D = 17, 300 Therefore, in beth the care amount of itemized diduetiens i mere than standard diduction so itwill be benificial fe Oanielle to auail the

benefit of iteniged diductione Tax Liability f Oanielle it she makes tue contrubutien మటక ప rors Income eus Ttenized deductions (0,300 Taxable Tneome 200, 000 179,7o0 Tax Liab 10% 12% 3,513 22. ৭,83१ 24%0 18,366 32% 9to0 39,475 9,701 39,476 84,000 160,725 O4,201 160,726-4,79,7o0 6,072 36,820

b) Tax Liab it Danielle does met make the contrubution Gross Income Ls Itemized Deductions Taxable Income 200, D00 17,300) 18d,7oo Tax Liab 0-9,700 9,701-39,47S 39,476-B4,20o 04.201 970 3573 9,039 /8,366 12% 22% 160,725 24 160,726-182,700 32% 7,032 31,780 lax Liability of Danielle is highen when she does mot Make lte coAtubt therefore, in Order to minimise her tax liability khe shauld make centubution to Special Oiympies