Question

Interview Notes

• 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 2 years ago, but he only lived with her for 2 months and the credit was disallowed .

• Roberta had wage income of $45,000 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 chooses to itemize her deductions, she is able to take a deduction of $10,772 for state income and real estate taxes .

a . True

b . False
33 . If Roberta chooses not to itemize, her standard deduction is $19,600 .

a . True

b . False

34 . Roberta is able to deduct interest paid on her home equity loan and the donation she made to a friend in need .

a . True

b . False
35 . Roberta must file Form 8862, Information To Claim Earned Income Credit After Disallowance, to claim the earned income tax credit after the disallowance .

a . True

b . False

Answer 1

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Answers are highlighed in yellow Explanation From year 2018, there is cap of $10,000 on itemized deduction of State and local taxes Answers 32) b. False b. False Because, standard deduction allowed will be $18,000 under head-of-household status. Additional $1600 can be available if aged 65 or above 33) 34) b. False For 2018, interest on home equity is disallowed. Donation is allowed only for qualified organizations. 35) a.TRUE It is standardized.