Deductions and Credits Flashcards

A taxpayer pays $8,000 in mortgage interest and $3,500 in state income taxes. The standard deduction is $13,850 (single). What is the most beneficial filing approach?

Answer: Take the standard deduction of $13,850

Taxpayers should choose the higher of itemized vs. standard deduction; $13,850 exceeds $11,500 here.

Under the SALT deduction cap established by the Tax Cuts and Jobs Act, what is the maximum deductible amount for state and local taxes?

Answer: $10,000

The TCJA capped the SALT deduction at $10,000 ($5,000 for married filing separately).

Which of the following medical expenses is NOT deductible on Schedule A?

Answer: Cosmetic surgery for appearance enhancement

Cosmetic surgery that merely improves appearance without treating a disease or deformity is not deductible.

A married couple filing jointly has an AGI of $200,000 and $18,000 in medical expenses. How much can they deduct?

Answer: $3,000

Only medical expenses exceeding 7.5% of AGI ($15,000) are deductible; $18,000 − $15,000 = $3,000.

The Child Tax Credit in 2023 is worth up to how much per qualifying child under age 17?

Answer: $2,000

The Child Tax Credit is $2,000 per qualifying child under 17 for tax year 2023.

Which filing status allows the highest standard deduction?

Answer: Married Filing Jointly

Married Filing Jointly has the highest standard deduction, which is roughly double the single amount.

A taxpayer donates stock with a fair market value of $5,000 (cost basis $1,000) to a qualifying charity. How much can they generally deduct?

Answer: $5,000 (fair market value)

Appreciated capital gain property donated to a qualified charity is deductible at its full fair market value.