Question

Johnny, who is single, had the following income in 2019:

• $59,800 in wages
• $200 in bond interest
• $10,000 in gambling winnings
• $5,000 in short-term capital gains.

Johnny who had no above-the-line deductions, listed the following below the line deduction items he had incurred during the year:

• $2,500 in medical expenses
• $8,000 of mortgage interest paid (on a $400,000 mortgage)
• $2,000 in real estate taxes
• $1,600 in state income taxes
• $12,000 in charitable contributions
• $3,400 in unreimbursed employee business expenses.

What is the total amount of Johnny's itemized deductions (regardless of whether they are more or less than the standard deduction)?

Group of answer choices

A) $29,500.

B) $26,100.

C) $23,600

D) $20,100.

Answer 1

Answer: Option C

Johnny's AGI = $59,800 + $200 + $10,000 + $5,000 = $75,000

Medical expenses are not deductible due to AGI limitation (above 7.5% of AGI). Unreimbursed employee business expenses are not allowed to be claimed as itemized deductions as Johnny does not fall in the prescribed classes of indiviuals who can claim unreimbursed employee business expenses. Itemized deductions are as follows:

Mortgage interest paid	8000
Real estate taxes	2000
State income taxes	1600
Charitable contributions	12000
Itemized deductions	23600