Should the Summerfields itemize deductions this year or take the standard deduct
ID: 2593755 • Letter: S
Question
Should the Summerfields itemize deductions this year or take the standard deduction? Why? Show your computations
Tax Item
Amount
Bart’s Earnings
$110,000
Betty Ann’s Earnings
$125,000
Federal Tax Withholdings
$22,700
State Income Tax Withholdings
$10,750
FICA & M/C
$17,978
Savings Account Interest (3.0% per year)
$3,200
State Refund from Prior Year
$2,425
Home Mortgage Interest Paid
$12,500
Real Estate Taxes Paid
$24,000
Charitable Contributions
$3,000
Unreimbursed Medical Expenses
$1,800
Stock Ownership: United Motor Company (purchased 9 months ago & which they still hold)
Current Value: $4,000
Cost basis: $8,000
Whole Life Insurance Policy
Face Value: $1,000,000
Cash Value: $15,000
Owner: Bart
Beneficiary: Betty Ann
Insured: Bart
Policy Dividend: $300
Tax Item
Amount
Bart’s Earnings
$110,000
Betty Ann’s Earnings
$125,000
Federal Tax Withholdings
$22,700
State Income Tax Withholdings
$10,750
FICA & M/C
$17,978
Savings Account Interest (3.0% per year)
$3,200
State Refund from Prior Year
$2,425
Home Mortgage Interest Paid
$12,500
Real Estate Taxes Paid
$24,000
Charitable Contributions
$3,000
Unreimbursed Medical Expenses
$1,800
Stock Ownership: United Motor Company (purchased 9 months ago & which they still hold)
Current Value: $4,000
Cost basis: $8,000
Whole Life Insurance Policy
Face Value: $1,000,000
Cash Value: $15,000
Owner: Bart
Beneficiary: Betty Ann
Insured: Bart
Policy Dividend: $300
Explanation / Answer
standard deduction for filing joint return holders is only 12700 (which is less than itemised deduction amount total) for 2017. Hence it is beneficial to take itemised deduction for the year.
Itemised deductions: Home mortagage interest 12,500 Real estate taxes 24,000 Chartible contributions 3,000 State income taxes 10,750 Total 50,250